CBO: Minimum Wage Raise to Cost 500,000 Jobs, Boost Income.

CBO: Wage hike to cost 500K jobs

From the article:

President Obama’s proposal to raise the minimum wage to $10.10 per hour would cost 500,000 jobs in 2016, according to a report released Tuesday by the nonpartisan Congressional Budget Office. The report also found hiking the wage from $7.25 per hour would raise income for about 16.5 million workers by $31 billion, potentially pulling nearly 1 million people out of poverty.

The White House and economic groups on the left immediately pushed back at the CBO’s conclusions on jobs even as they hailed the findings on poverty, saying its conclusions on jobs ran counter to other research. “Sometimes you have to have a respectful disagreement among economists,” Furman said in a conference call. “I think a lot of economists who have looked at [the] literature would summarize it differently than CBO has done here.”

The office of Speaker John Boehner (R-Ohio) was quick to seize on the CBO finding, arguing it shows Republicans are right that the proposal would hurt the economy. “This report confirms what we’ve long known: while helping some, mandating higher wages has real costs, including fewer people working. With unemployment Americans’ top concern, our focus should be creating — not destroying — jobs for those who need them most,” said spokesman Brendan Buck.

Senate GOP conference Chairman John Thune (R-S.D.) noted that the CBO estimated the upper range of job losses from hiking the minimum wage to $10.10 was 1 million jobs. “Despite the fact that unemployment is Americans’ top concern, Democrats continue their insatiable quest to pass heavy-handed government policies that are costing jobs,” he said.

“The CBO report illustrates what small businesses have long contended — increasing the minimum wage costs jobs,” said National Federation of Independent Business spokesman Eric Reller. “Coming on the heels of rising health care costs, higher taxes, and increased regulations — this is another example of Washington piling on to small business.”

The liberal group Americans United for Change, meanwhile, blasted the findings, releasing a YouTube video that depicted the CBO’s conclusions as being from outer space. AFL-CIO union President Richard Trumka dismissed the CBO finding as “noise.” “Every time momentum builds for lifting wages, conservative ideologues say it will cost jobs,” he said. “Let’s raise the wage and we’ll prove the CBO wrong again.”

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Gotta love the leave the gun, take the cannoli attitude from the lefties.

Cool cool cooooooooool

Really do not want a minimum wage increase. Will freaking MURDER people in my wage area who DO make above minimum wage, will be settled just above the raised minimum wage, yet will have to pay more for everything....

There has to be a better way to get more money into the hands of those who need it than raising minimum wage and fucking everyone else over...

Minimum wage should be scrapped. We should let the market decide the value of a person's efforts.

Stupid idea. Homelessness would skyrocket.

Meh, can't make everyone happy. The majority of Americans can't live a proper life style with the current minimum wage. The few that actually can barley make it each month.

So we trust the CBO now?

So potentially the raise could cost 500,000 to 1,000,000 jobs and help about 1 million people escape poverty and 16.5 million people could make more money.

The question then is do the positive effects outweigh the negative or vice versa (and which effects are more likely)?

Or perhaps we should do something in the middle: raise the minimum wage but not that big of a jump (almost $3 an hour). Maybe increase the minimum wage to $8 or $8.50 an hour.

even $10.10 sucks

@mrintro: Agreed. It should be $110.10. :P

In a pure capitalistic economy in which the capitalists continue to achieve efficiency and utilizing technological innovation, it is to be expected that wages will inevitably be driven to the level of means of subsistence of the workers so this is a terrible idea. I can't see this benefiting anyone but moneyed men.

I doubt raising the minimum wage would do anything to the economy at large and I highly doubt it is in the actual interest of the working class. At the very least it needs to be coupled with other measures, like higher taxes on the super rich and better workers' rights overall, otherwise this wage increase would be quite meaningless and deceptive. A higher minimum wage alone would only sort of divert some resources from some people's pockets to others' so effectively the amount of capital owned by the workers hasn't changed. Even if such an increase in wages would to come from the pockets of those who can actually afford it and to an extent owe it to the economy, the super rich, they will be able to go around this by either cutting jobs or increasing prices to balance things out. As long as the amount of capital shared between the working class is the same, and as long as the capitalists can find a way to cheat the system or maintain a preferable and expedient economic status quo, any attempt to redistribute that capital is trivial and won't rise above the level of economic gestures.

But why someone be paid more for their services than it's worth?

Ask those CEO's who drove companies into the ground and then golden-parachuted out to wealth and riches.

These are government contractors who are hired to do work for the federal government. Some companies are either for profit or non profit who do have the net income to be able to pay their workers $10.10 an hour. These companies will more then likely raise their fees of service to the federal government when there is a contract renewal.

16.5 million people is a lot and by raising $31 billion of extra money will go into the economy as spending. People will want to spend their extra money in increasing their quality of living. This will probably cause other companies to hire more people because of the extra money they will end up getting, so to say that its going to cost 500,000 jobs directly or in directly isn't exactly correct.

Damned if you do, damned if you don't.

Better than $2.16!

Obviously, but it really depends on buying power.

Not too surprised. It's hard to imagine a minimum wage hike not having either an effect on unemployment or an effect on prices.

@Serraph105:

What do you mean buying power?

As if not raising minimum wage would keep the corporate overlords from slashing jobs and raising prices in the long term...

Buying power just means how much can your money actually buy.

e.g. imagine that your salary increases by 10%, but the prices of the goods you buy (food, housing, etc.) all increase by 20%. Although your salary has gone up, your buying power has gone down (that is, you can get less food/housing/etc. than you could before)

@THUMPTABLE: the amount of goods and services a certain amount of currency will buy you

@THUMPTABLE: what chess and dave said

Buying power of $2.16 is not relevant to my statement

Pardon my confusion then, but what were you referring to then?

@br0kenrabbit: You should probably look up what a "golden parachute" is and its purpose.

Where the hell are you getting this from? Not even the extremely fallacious Iron Law of Wages agrees with you and that's basically the only economic theory which argues that wages tend to subsistence over time.

Or people would be more inclined to work hard and make themselves useful.

We've got far too many people with zero training, zero skills, and zero motivation to learn new skills.
But they need jobs, because without jobs, they're simply leeching off those who've worked hard throughout their lives, in the form of welfare checks and food stamps.

So whats gonna motivate them to learn skills and work hard? lower wages, less opportunity! lol but yur kidding right?

So what you are saying is the cost of housing increases 20%, so right off the bat ive made tens of thousands of dollars on my home value, and i make 10% more income so i can more easily afford my fixed mortgage payments? sign me up. What part of this is bad?

I know this was meant to be a whole, "inflation is the devil" argument. But inflation helps people in debt (aka the majority of lower income americans) and it drives investment, when hoarded money loses its value over time. So yea, in general, low to moderate inflation is a good thing.

I think you really missed chessmaster's point there.

which is what? His point was stupid, why are you defending it? I kow a ton about fiance so i can prolly help you guys if i feel like it

We can see what they do lateer, hopefully im on.

Literally all that he was saying is that nominal income =/= purchasing power, which is a very basic concept in economics.

Beard, I was just giving an example of what buying power (purchasing power) means. i.e. differentiating between real and nominal income. I wasn't making any sort of commentary on inflation, debt, or anything else.

Ugh, why do fast food workers think they're worth 10 dollars an hour? Grilling frozen, faux-food is not challenging enough to warrant that kind of pay.

It's a dog eat dog society. Every man for himself. You don't get what you want by telling yourself that you don't deserve it.

I think some states should do it. Massachusetts as an example. Cost of living is huge.

short term fixes.... only helps people who is making minimal wage for a bit till companies raise the prices on everything to kill the people who wasn't making minimal wage before

Minimum wage used to be enough money to live on.

By today's dollars, the minimum wage of the 60 and 70s would amount to about 12 dollars an hour.

There's no getting around that fact.

10 dollars an hour is a reasonable compromise.

Because I do not want some disgruntled employee spitting into my Big Mac because his boss is not paying him enough.

i would rather see wages go up than continue watching companies have departments that help their employees get on welfare.

watching these companies game the system is outrageous.

@Aljosa23: Sounds like you're eating at the wrong place.

@one_plum: I agree, but most people see that as a reason to bitch about not getting what they want instead of going after it. If your job sucks, most people will complain they're not being paid enough, where the people who take advantage of their future will move on to something else, and work their asses off to get there.

Inflation will continue to occur in without a rise in the minimum wage. Typically, as is the case here, the minimum wage lags inflation. We are simply subsidizing many of the current wages at this level with public assistance because that wage level isn't enough to sustain many of those workers.

If those costs become baked into the costs of the goods rather than being abstracted out into taxation, I would tend to view that as a good thing that ends a market distortion.

This may be an attempt to promote the trickle down effect. Speaker Boehner might be against that.

It ain't gonna change a thing.. minimum wage goes up, then shortly it will become like not making anymore money. same old, same old.