A hike in the hourly minimum wage seems an attractive idea, but it also carries dire consequences.
According to a Congressional Budget Office report released last Monday, a $15 minimum hourly wage could cost more than 3.7 million jobs by 2025.
“The federal minimum wage is $7.25 per hour for most workers,” the CBO report notes.
“The Congressional Budget Office examined how increasing the federal minimum wage to $10, $12, or $15 per hour by 2025 would affect employment and family income.”
In case the minimum wage is increased to $15 an hour, millions of Americans would be put out of their work.
“In an average week in 2025, the $15 option would boost the wages of 17 million workers who would otherwise earn less than $15 per hour,” the report says.
It adds: “Another 10 million workers otherwise earning slightly more than $15 per hour might see their wages rise as well. “But 1.3 million other workers would become jobless, according to CBO’s median estimate.
“There is a two- thirds chance that the change in employment would be between about zero and a decrease of 3.7 million workers. The number of people with annual income below the poverty threshold in 2025 would fall by 1.3 million.”
A number of experts have opposed a $15 an hour minimum wage hike in the past. A survey of around 200 working economists conducted in March found that 74% of the participants recommended against it.
“According to a new survey of 197 working economists conducted in February, 74% oppose raising the federal minimum wage to $15 an hour and almost half (43%) think that the federal minimum wage should be eliminated altogether,” the Daily Wire said of the survey.
The outlet added: “88% of economists thought an acceptable federal minimum wage should be less than $15; 66% agreed that an appropriate federal minimum wage would be $10 an hour or less. … 84% thought a $15 minimum wage would negatively affect youth employment; 77% believed that the minimum wage hike would have a negative impact on the number of jobs available.”
Moreover, a study looking to find the consequences of the minimum wage hike in California’s restaurant industry also concluded against it.
Conducted by the Center for Economic Forecasting and Development (CEFD) at the University of California Riverside School of Business, the study found that a $15 minimum wage would lead employers to reduce work hours so as to cut costs and provide fewer opportunities for young or low-skill people.
The recent CBO report was hailed by the Republicans who said the report ‘confirmed’ their objections against such a mandated wage hike.
“This report confirms what we already knew about House Democrats’ Raise the Wage Act. American workers and families will lose their jobs if this bill is enacted,” said Rep. Steve Womack of (R-AR), a member of the House Budget Committee, according to The New York Times.
However, Heidi Shierholz, one of the biggest proponents of the minimum wage-hike, said that the ‘benefits exceed the costs’ in this scenario.
“As a group, low-wage workers would be just unambiguously better off,” said Shierholz, the policy director at the Economic Policy Institute, according to the Times.
“The bottom line is the benefits exceed the costs.”