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Raising the Minimum Wage is Still Good for the Poor, CBO Report Shows

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CBO Report, Raising the Minimum Wage Still Good for the Poor

This graph from the CBO’s minimum wage report shows the estimated broadly shared income gains that a $10.10 minimum wage would bring. (Congressional Budget Office)

Last week, the Congressional Budget Office (CBO), a federal nonpartisan agency, heralded good news for America’s working poor families with the release of a report confirming the net positive economic impact of raising the federal minimum wage to the president’s proposed $10.10 per hour.

News agencies and opponents of raising the minimum wage, however, mostly ignored the good news of positive outcomes not only for working poor people, but for the vast majority of Americans. That’s why I’ve decided to recap them here:

If the minimum wage is raised to the proposed $10.10 an hour by 2016, the CBO estimates that…

  • 16.5 million low-wage workers would earn higher wages.
  • A net 900,000 people (i.e., factoring in potential job losses) would no longer be working full-time yet living in poverty.
  • The American workforce would see a $31 billion increase in income — the majority of it going to families earning at or below twice the poverty threshold.
  • Families with earnings below the poverty threshold would have an average 3 percent increase in income.
  • Only America’s top earners (with incomes six or more times the poverty threshold) would see a decrease in their income, and this decrease would be small.

Opponents of a higher minimum wage trumpeted the only statistic in the entire report that suggested a potentially harmful effect on low-wage earners – an estimate that there is a two-thirds chance that raising the minimum wage would lead to a loss of about 500,000 jobs (0.3 percent of total U.S. employment).

But the benefits I’ve just listed, for millions of low-wage workers and for the entire economy, overwhelmingly outweigh the possible loss of 500,000 jobs that pay poverty-level wages.

The idea that higher wages necessarily result in fewer jobs is simplistic and short-sighted. Higher wages do not operate in a vacuum. Raising the minimum wage produces many other positive results — most obviously, a rise in people’s earnings. And as people make more money, they spend more, they pay more in taxes, the economy grows, and more good jobs are created.

Thanks to the Congressional Budget Office, U.S. policymakers have a small mountain of evidence that raising the federal minimum wage is the right course of action — for the nation's economy, and especially for its most vulnerable families. 

The 2014 Hunger Report, Ending Hunger in America, recommends a $12 minimum wage — what it takes for a single breadwinner in a family of four, working full-time, year-round, to pull her or his family just over the federal poverty line. Read more about the rationale behind that recommendation at hungerreport.org.

Derek Schwabe

 

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Comments

Hi, The answer is to raise taxes on the rich not devalue USA currency. Thanks. God bless. Aaron

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