So, the data munchers and crunchers at the CBO have been awfully busy in recent weeks, and now they’ve come out with a report on the impact of the proposal to increase the minimum wage to $10.10 from its current level of $7.25.
Here’s my rundown over at the NYT Economix blog, but let me expound on a few of those points here as well.
The big dustup will be over the budget office’s prediction that employment would be reduced by 500,000 jobs. But 16.5 million low-wage workers benefit directly from the increase–they earn between the current and proposed new minimum of $10.10–and another 8 million will indirectly get a wage bump (that’s the spillover effect emanating from employers who raise the pay of workers slightly above the new minimum; see page 21).
It looks to me like CBO choose a pretty high-end estimate of job loss effects given the current state of the research. But let’s say they’re right. That means that 98% of those affected by the increase will be helped by it.
If you can find me another policy that lifts the wages of that many low-wage workers at no cost to the federal budget (again, according to CBO), let me know what it is…quickly!
Since the report came out a few hours ago, I’ve heard from a number of folks who think there should be no employment losses. But as I read the long and varied literature on this, the research finds job loss effects ranging from small to zero. Some very high quality studies find zero, some find small. Some less reliable studies find large negatives or positives (see the figure in my NYT post). CBO, for whatever reason, pulled a card [that’s a pun, for those steeped in this work] from the high-end of the deck to get their -500,000 employment impact.
But here’s the thing: even if they’re right–and even with their high card, they’re in the same universe–the result is the same one I’ve harped on forever in these parts: the beneficiaries far outweigh those displaced.
And think about this: when those displaced workers find their next job, they’ll earn more.
So, again, one can easily predict the ensuing news cycle and press releases from the opposition. But this report confirms my priors: raising the federal minimum wage to $10.10 is a big winner for low- and moderate-income working families, at no cost to the federal budget. And let’s face it, those families could really use a winner right about now.