CBO Says Raising Minimum Wage to $15 an Hour Would Kill Jobs, Because Obviously It Would
In a bombshell report released yesterday, the Congressional Budget Office (CBO) came to the shocking conclusion that raising the federal minimum wage to $15 would cost the economy more than a million jobs.
Specifically, the CBO estimates that raising the minimum wage would cost 1.4 million jobs, reducing total national employment by 0.9 percent in 2025, the first year in which the full $15 hourly wage would be in effect. Some people’s wages would increase, lifting about 0.9 million people out of poverty in the process; the evidence suggests these higher wages would be largely paid for by consumers in the form of higher prices. The knock-on effects to employment, taxation, and various federal programs would raise the deficit by about $54 billion over the next decade.
I am being somewhat hyperbolic when I call this a bombshell; this conclusion is not a shock or much of a surprise at all. You can always argue with the CBO’s estimates and models, and at times it’s been quite wrong. But it’s fairly obvious that substantially raising federal wage requirements would result in some number of employers choosing to employ fewer people, especially in rural areas with lower costs of living where employers are likely to be more sensitive to increased labor costs. Of course hiking the minimum wage would cost jobs.
In recent years, however, it has become fashionable in certain quarters of the left to minimize or outright dismiss the negative effects on employment caused by raising the minimum wage. Sen. Bernie Sanders (I–Vt.), a longtime backer of raising the federal minimum, for example, has been known to cite figures from a study that assumed that raising the wage to $15 an hour would result in no net changes to employment. Essentially, in this view, everyone making below $15 an hour would get a raise, and no one would lose a job. A January press release put together by House Democrats on the Education and Labor Committ
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