A Congressional Budget Office report on the minimum wage has posed an old question to Capitol Hill: Are you willing to cut hundreds of thousands of jobs to give higher wages to millions?
The CBO report, which was released Tuesday and has drawn criticism from some Democrats and the White House, said increasing the minimum wage would have two main effects on low-wage workers:
“Most of them would receive higher pay that would increase their family’s income, and some of those families would see their income rise above the federal poverty threshold. But some jobs for low-wage workers would probably be eliminated, the income of most workers who became jobless would fall substantially, and the share of low-wage workers who were employed would probably fall slightly.”
The report, at the request of lawmakers, studied the effects of raising the minimum wage to $9 per hour — as the president proposed a year ago — and $10.10 per hour as he proposed this year and as the so-called “Fair Minimum Wage Act of 2013″ would do after two years, subsequently indexing the minimum wage to inflation.
The effect of raising the wage to $9 per hour, according to the CBO, would be a net loss of 100,000 jobs but higher wages for approximately 7.6 million people. In turn, raising the minimum wage to $10.10 an hour would result in 500,000 jobs lost but raise wages for 16.5 million, according to the analysis. Full story