Skip to comments.White House: Employers Prevent Job Losses After Min. Wage Hike by ‘Accepting Lower Profit Margins’
Posted on 02/18/2014 5:10:32 PM PST by SeekAndFind
The White House lauded a Congressional Budget Office report on the proposed minimum wage hike to $10.10 per hour while brushing off one key finding: that such a bill could cost half a million jobs, and maybe more.
The new Congressional Budget Office (CBO) report finds that 16.5 million workers would get a raise from increasing the minimum wage to $10.10 per hour and this would help millions of hard-working families, reduce poverty, and increase the overall wages going to lower-income households, Jason Furman, chairman of the Council of Economic Advisers, and Betsey Stevenson, Council of Economic Advisers member, wrote in a White House blog post this afternoon.
On employment, CBOs central estimate is that raising the minimum wage to $10.10 per hour would lead to a 0.3 percent decrease in employment and CBO acknowledges that the employment impact could be essentially zero, they continued. But even these estimates do not reflect the overall consensus view of economists which is that raising the minimum wage has little or no negative effect on employment. For example, seven Nobel Prize winners and more than 600 other economists recently stated that: In recent years there have been important developments in the academic literature on the effect of increases in the minimum wage on employment, with the weight of evidence now showing that increases in the minimum wage have had little or no negative effect on the employment of minimum-wage workers, even during times of weakness in the labor market.
The CBO report says that once fully implemented in the second half of 2016, the $10.10 option would reduce total employment by about 500,000 workers, or 0.3 percent, CBO projects.
As with any such estimates, however, the actual losses could be smaller or larger; in CBOs assessment, there is about a two-thirds chance that the effect would be in the range between a very slight reduction in employment and a reduction in employment of 1.0 million workers, the report adds.
The report also found that the maximum impact from a minimum wage hike would not be felt by families below the poverty line.
The increased earnings for low-wage workers resulting from the higher minimum wage would total $31 billion, by CBOs estimate. However, those earnings would not go only to low-income families, because many low-wage workers are not members of low-income families. Just 19 percent of the $31 billion would accrue to families with earnings below the poverty threshold, whereas 29 percent would accrue to families earning more than three times the poverty threshold, CBO estimates, the report states.
Once the increases and decreases in income for all workers are taken into account, overall real income would rise by $2 billion. Real income would increase, on net, by $5 billion for families whose income will be below the poverty threshold under current law, boosting their average family income by about 3 percent and moving about 900,000 people, on net, above the poverty threshold (out of the roughly 45 million people who are projected to be below that threshold under current law).
Opponents claim raising the minimum wage wont reduce poverty, but that is not the case, as many American who work full time are unable to make ends meet. This finding echoes the broad consensus of academic studies on the topic, which is nearly unanimous in finding that increases in the minimum wage reduce poverty, Furman and Stevenson wrote for the White House.
Overall the logic for the finding that raising the minimum wage does not result in large adverse impacts on employment is that paying workers a better wage can improve productivity and thereby reduce unit labor costs. These adjustments, along with others that firms can make, help explain why the increase in the minimum wage need not lead to a reduction in employment. Higher wages lead to lower turnover, reducing the amount employers must spend recruiting and training new employees. Paying workers more can also improve motivation, morale, focus, and health, all of which can make workers more productive. In addition, by reducing absenteeism, higher wages can increase the productivity of coworkers who depend on each other or work in teams. In addition, businesses can adjust in other ways rather than reducing employment (for example, by accepting lower profit margins). CBOs estimates do not appear to fully reflect the increased emphasis on all of these factors from the recent economics literature.
He’s just trying to destroy capitalism.
Bless his heart.
His JOB BLOCK Program is working as intended.
Aren’t we so fortunate that we have people like him, Harry Reid, Chuck U. Schumer, Mitch McConnell, John Wayne McCornyn, John Boehner, Eric Cantor, et all, in positions of power?
I’m sure stockholders have no problem with lower profit margins. /sarc
May be fine for large companies, how about the small mom and pop outfits? They are, for the most part, already making minimum profit.
As an employer I have started people at minimum wage. The best case received a raise after one day, others at the 90 day mark, There are some that would and did stay at minimum wage as long as they worked for me.
Every day he gets worse, the wretched marxist cur.
Employers don’t owe employees squat.
The only reason to be in business is profit and never to give someone a job!
Obama just keeps on delivering body blow after body blow to our economy.
unbelievable. What’s next, a limit on profits and everything over goes to the government?
The buffoon in the White House is absolutely clueless. Bless his ignorant little heart!
Igsnay on the axestay. Don't give him any ideas.
“In recent years there have been important developments in the academic literature on the effect of increases in the minimum wage...”
Well then, the argument is settled./sarc
We’re becoming Venezuela:
combine “the IRS” and you get “Theirs”. MEA SARC
Because as business owners we have money to burn, right?
I mean we should take business advice from a guy who never even held a job let alone ran a business.
hard to keep up with the daily madness coming from this guy
It’s going to be a long 3 years
He's never run so much as a hot dog cart but he's going to tell every employer in America how to do their job?
As soon as the minimum wage goes up so does the cost of living by the same percentage. So, when the minimum wage went from 1.35 to 1.50 (back in my day), 1.50 became the new 1.35. Same with today’s minimum wage, it is the new 1.35 and any raise would only become the newer version of 1.35.
intentional no doubt
Employers should “accept lower profit margins.” That from the biggest flippin’ spender ever to hit the District of Corruption. Your government should accept lower tax rates, IDIOT!
Or raise prices,....if their customers have not yet reached the point of price resistance.
In that case, the boss can just fire everybody and auction everything off. The taxpayers can support his ex-employees while they support GE and GM as well. He won't be one.
And he is doing a good job of destroying the jobs that are left.
Kinda like the left complaining about the huge profits of Walmart yet their profit margins are in the range of 3%.
These "experts" will never get that these workers will not be better off when everything they have to buy goes up in price to pay for higher wages.
all power to the government and the hero of benghazi
“The only reason to be in business is profit and never to give someone a job!”
I was recently interviewed by the new president of a stumbling privately held company and he astonished me by saying, “It is our goal to be the best place in the city to work.” I said, “What do you mean by that?” He replied, “We want to be known for the highest pay and most generous benefits.” I’d already determined that one of their problems that would have directly affected my success there was overly generous benefits. I held my tongue. Unfortunately, they hired somebody else.
The ideologue speaks his mind. Thank you Great Leader for mandating the profits of business owners.
Price controls working out so well in Venezuela
Don’t forget that weasle McNasty and little Lindsay Graham in the list of enablers.
just one riot away from a new government
maybe sean penn and oliver stone can put humpty dumpty back together
Obama says he wants to raise minimum wage from $7.25 to $10.10 by 2016. That's an increase of 39 percent. So the cost of living will go up 39 percent. As I'm on S.S., will my S.S. checks go up 39 percent by 2016 to allow me to buy $10 cheeseburgers? (Well, if a good cheeseburger meal costs about $7 now, then it'll be $10 later after a 39 percent increase.) No good will come from this meddling by the fool.
That sounds like a government entity and not a private company.
If it was a private company they will be out of business in short order!
There is an abundance of Back-Stabbers in Congress that demand to be held to account. The question is, will they?
Here in TEXAS we will do our part. Hopefully, we won’t be alone in “culling the herd” during our Primary Season.
I guess the evil Capitalists didn’t get the meme ‘Capitalism is EVIL ‘!!! /s
White House jackboot TOTALITARIANS have spoken on behalf of King Hussein.
Meanwhile, CONgre$$ chirps and the USSC runs interference for the U.S.A. - United Socialists of America
Check$ and Balance$?
The root cause of the devaluation of currency by the socialist created FED is never discussed.
$10,10 ? You don’t need 20/20 eyesight to see that “Socialism Is Legal Plunder”. The minimum wage has to keep up with the plunder, otherwise the low-information voters may get restless.
“May be fine for large companies,...”
Large companies are not paying ‘minimum wage’, but when it comes time for their bargining unit employees to demand a higher wage, ‘minimum wage’ comes into play. The Unions love ‘minimum wage’ hikes...they use it to get more money.
It all adds to INFLATION, and though they don’t know it, it means that, even with wage increases ‘tied to the minimum wage’, they will be worse off than before. Inflation is deadly...and the Fed is doing this to us, even with out a ‘minimum wage’ influence.
Shhhh!!! He is probably reading this, don’t give him any new ideas.
Point Seven. All wages, prices, salaries, dividends, profits, interest rates and forms of income of any nature whatsoever, shall be frozen at their present figures, as of the date of this directive.
Government experts know best, after all. Because the current government is a paragon of economic propriety. Everyone in the press says so...well, they've been told to, anyway.
In addition, government can lower taxes to help create more jobs. After all the pain should be shared, right Mr. Obama!
40 hours work at $7.25/hr = $290
29 hours work at $10.10 = $292
Coincidence ?? NOT
Obozocare is taking the workweek down to 29 hours for many minimum wage employees. Gotta pay them the same since the King says so!!!
According to Wikipedia, Jason Furman’s life has been spent in academia, think tanks, politics, and government jobs — none of it in a productive business or even in a managerial role. He knows what real businesses do the same way Susan Rice knows that a film caused Benghazi.
Dream on, Marxists.
Gee, at one time not too long ago the title would have been considered satire....
Sole proprietors may find that it’s easier closing the doors and investing rather than get weak returns along with all the problems attending commerce.
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