CBO confirms Dem minimum wage hike will cost at least half a million jobs

Thomas Lifson
The Congressional Budget Office has issued a study on the proposed minimum wage hike being offered by President Obama and the Democrats in an effort to distract the public from Obamacare, demonize Republicans as mean, pose as guardians of the poor. Erik Wasson of The Hill:

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.

Democrats immediately pushed back on the job loss figure, pretending that a price rise does not decrease demand, contrary to all laws of market behavior.

 "CBO's estimates of the impact of raising the minimum wage on employment does not reflect the current consensus view of economists," Council of Economic Advisers Chairman Jason Furman wrote in a blog post. "The bulk of academic studies, have concluded that the effects on employment of minimum wage increases in the range now under consideration are likely to be small to nonexistent."

Given its findings on poverty alleviation, Furman told reporters the CBO report was an overall positive for the White House.

Democrats now have their issue and will run full steam ahead with it. Despite the obvious truth that such a wage hike will cut off the lowest rung on the ladder of economic success for young and unskilled workers who have the least to offer employers, opposition by the GOP is a trap that will be used to damage them in the eyes of the low information voter majority. Democrats and their media friends excel at tarring common sense as mean-spirited opposition to a "wage hike for America" and in the end will get their way with minimum wage hikes. So for the GOP, the best course might be to go along with indexing the minimum wage to the consumer price index and removing the issue from Democrats' control.

At some future point when (if?) the GOP controls Congress and the presidency, it would be time to launch a coordinated effort to offer opportunity exceptions to the minimum wage, for young workers, for trainees, and for others in need of help on the first rung of the ladder of success, when they are unable to generate enough value to cover the artificially high wage.

Conservatives are guided by principle, not appearances, so this prescription will not sit well with many, I realize. The principled thing to do is to oppose all minimum wages, because they harm the intended beneficiaries. But adherence to that principle simply won't work at this point in time. It will hand seats oin the House and Senate to Democrats, endangering a takeover of the Senate, and pay the groundwork for a Democrat president to wreak further harm on the economy with even more heavy-handed regulations that sound good to those who don't pay that much attention - the vast majority.

I wish it weren't so. But it is time for the GOP to short-circuit obvious Dem PR gambits. As people get used to ordering fast food with computer terminals, it will become easier to make the point that minimum wage hikes cost jobs.


The Congressional Budget Office has issued a study on the proposed minimum wage hike being offered by President Obama and the Democrats in an effort to distract the public from Obamacare, demonize Republicans as mean, pose as guardians of the poor. Erik Wasson of The Hill:

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.

Democrats immediately pushed back on the job loss figure, pretending that a price rise does not decrease demand, contrary to all laws of market behavior.

 "CBO's estimates of the impact of raising the minimum wage on employment does not reflect the current consensus view of economists," Council of Economic Advisers Chairman Jason Furman wrote in a blog post. "The bulk of academic studies, have concluded that the effects on employment of minimum wage increases in the range now under consideration are likely to be small to nonexistent."

Given its findings on poverty alleviation, Furman told reporters the CBO report was an overall positive for the White House.

Democrats now have their issue and will run full steam ahead with it. Despite the obvious truth that such a wage hike will cut off the lowest rung on the ladder of economic success for young and unskilled workers who have the least to offer employers, opposition by the GOP is a trap that will be used to damage them in the eyes of the low information voter majority. Democrats and their media friends excel at tarring common sense as mean-spirited opposition to a "wage hike for America" and in the end will get their way with minimum wage hikes. So for the GOP, the best course might be to go along with indexing the minimum wage to the consumer price index and removing the issue from Democrats' control.

At some future point when (if?) the GOP controls Congress and the presidency, it would be time to launch a coordinated effort to offer opportunity exceptions to the minimum wage, for young workers, for trainees, and for others in need of help on the first rung of the ladder of success, when they are unable to generate enough value to cover the artificially high wage.

Conservatives are guided by principle, not appearances, so this prescription will not sit well with many, I realize. The principled thing to do is to oppose all minimum wages, because they harm the intended beneficiaries. But adherence to that principle simply won't work at this point in time. It will hand seats oin the House and Senate to Democrats, endangering a takeover of the Senate, and pay the groundwork for a Democrat president to wreak further harm on the economy with even more heavy-handed regulations that sound good to those who don't pay that much attention - the vast majority.

I wish it weren't so. But it is time for the GOP to short-circuit obvious Dem PR gambits. As people get used to ordering fast food with computer terminals, it will become easier to make the point that minimum wage hikes cost jobs.