The Congressional Budget Office (CBO) is out with a new report undercutting the case congressional Democrats and President Joe Biden have been making in favor of raising the federal minimum wage to $15 an hour.
On Monday, the CBO released its report analyzing the economic impact of the Raise the Wage Act, which would increase the minimum wage to $15 by 2025. The CBO found that legislation would increase the federal budget deficit by $54 billion between 2021 and 2031. More importantly, however, the legislation would drive up the prices of goods and services, while also reducing employment by 1.4 million jobs. The report states:
In 2025, when the minimum wage reached $15 per hour, employment would be reduced by 1.4 million workers [or 0.9 percent of all jobs], according to CBO’s average estimate. In 2021, most workers who would not have a job because of the higher minimum wage would still be looking for work and hence be categorized as unemployed.
“Young, less educated people would account for a disproportionate share of those reductions in employment,” the CBO adds.
The report comes as both Biden and Democrats have argued that raising the minimum wage should be included in the $1.9 trillion relief package meant to combat the economic impact of the novel coronavirus pandemic. Last month, in an address delivered from his home state of Delaware, Biden asserted that a $15 minimum wage was required to ensure “nobody working 40 hours a week should be living below the poverty line.”
“There is real pain overwhelming the real economy, one where people rely on paychecks, not their investments, to pay for their bills and their meals and their children’s needs,” the president said.
With the inclusion of the $15 minimum wage increase, the $1.9 trillion relief program has become controversial. Even moderate Democrats, like Sen. Joe Manchin (D-WV), have expressed concerns that such a large hike would overly burden small businesses already reeling because of the virus.
Given the narrow vote margin required to pass the coronavirus relief package via budget reconciliation, a tactic allowing the Senate to pass legislation affecting spending and the revenue by a simple majority of 51 votes, it is unclear if Biden’s push for a $15 minimum wage will succeed.