The Congressional Budget Office has now told us what it believes would be the effect of increasing the minimum wage to levels currently being proposed:
A popular Democratic proposal to raise the minimum wage to $10.10 an hour, championed by President Obama, could reduce total employment by 500,000 workers by the second half of 2016. But it would also lift 900,000 families out of poverty and increase the incomes of 16.5 million low-wage workers in an average week....Overall real income would increase by $2 billion under the $10.10 plan, and would increase by $1 billion under the $9.00 plan, according to the CBO. Far more people would gain than would lose.
Republicans contended the policy would be a job-killer, while Democrats asserted it would help alleviate poverty. Economists said both might be right....
The second proposal would increase the minimum wage to $9, without any indexing for inflation. That would have much smaller effects, the budget office found. It would reduce employment by 100,000 workers by the second half of 2016, and push about 300,000 people above the poverty line....
But we shouldn't do it, according to conservatives, because some people would lose jobs, or not be hired.
By that rationale, we should never raise the minimum wage -- not now, not a year from now, not a decade from now, not a hundred years from now. We should keep the minimum wage exactly where it is for all eternity, until its real purchasing power is the equivalent of a contemporary Third World wage, because it will always motivate a certain number of employers to fire or not hire.
The CBO was created in 1974. What would the CBO have concluded about the economic effects of abolishing slavery? What would the CBO have said about the effect on employers' willingness to hire of the Pure Food and Drug Act, or laws limiting child labor, or the original minimum wage, or Social Security, or Medicare?
I know the labor impacts of these laws were understood and discussed when they were under consideration. If I were an economist, I'm sure I could direct you to the relevant analyses. The point is that we didn't reject these laws because somebody somewhere might lose a job. We weighed the pros and cons.
If we want to create the optimal conditions to motivate our precious job creators to create jobs, I suppose what we need to do is repeal the Great Society, the New Deal, and the Progressive Era.
Which, as I understand it, is exactly what the right-wingers crowing about this CBO report would like us to do.
