With Democrats planning a vote this week on a bill more than doubling the federal minimum wage, the nonpartisan Congressional Budget Office has weighed in with a timely estimate of the potential benefits and costs.
To raise the federal minimum from $7.25 an hour, where it has been for the past 10 years, to $15 an hour over five years, as the Democratic bill would do, would bring a pay increase to 17 million workers whose wages would otherwise be lower than $15 per hour, as well as an additional 10 million low- and moderate-wage workers who would indirectly benefit. Family income for workers below the poverty line would grow by $8 billion, helping to reduce the number of people in poverty by 1.3 million. However, some 1.3 million low-wage workers who might otherwise have gotten jobs paying less than $15 per hour would go without employment and the job-loss figure could go as high as 3.7 million in a worst-case scenario.
Neither the benefits the CBO identifies, nor the risks, seem terribly dramatic in the context of the $21?rillion U.S. economy, with its 160 million-member labor force and median hourly wage of $18.58 in 2018. What the CBOs report does, or should, remind lawmakers is that there is a trade-off in raising the minimum wage so substantially and that, while the upside would accrue to societys most vulnerable, so would the downside. Those who would lose out, in the form of no job at all, would wind up not with less pay but with no pay.