Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

White House: Employers Prevent Job Losses After Min. Wage Hike by ‘Accepting Lower Profit Margins’
Pajamas Media ^ | 02/18/2014 | Bridget Johnson

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, CBO’s 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 CBO’s 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 CBO’s 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 won’t 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). CBO’s estimates do not appear to fully reflect the increased emphasis on all of these factors from the recent economics literature.”


TOPICS: Business/Economy; Culture/Society; Government; News/Current Events
KEYWORDS: jobs; minimumwage; profitmargin; unemployment
Navigation: use the links below to view more comments.
first previous 1-2021-4041-6061-69 next last
To: SeekAndFind
Says the fairy whose never met a payroll with his own profits in his entire life.
41 posted on 02/18/2014 5:58:05 PM PST by E. Pluribus Unum (Islam is a religion of peace, and Moslems reserve the right to behead anyone who says otherwise.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind
Point by point, 0bama is issuing Directive 10-289:

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.

42 posted on 02/18/2014 5:58:09 PM PST by Billthedrill
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind
In addition, businesses can adjust in other ways rather than reducing employment (for example, by accepting lower profit margins).

In addition, government can lower taxes to help create more jobs. After all the pain should be shared, right Mr. Obama!

43 posted on 02/18/2014 6:03:03 PM PST by Lockbox
[ Post Reply | Private Reply | To 1 | View Replies]

*


44 posted on 02/18/2014 6:04:11 PM PST by tomkat (keeps checking in, hoping to see that ONE headline . . .)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Chode

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!!!


45 posted on 02/18/2014 6:05:45 PM PST by datura (Democrat=Communist, GOP=Democrat, TEA=American)
[ Post Reply | Private Reply | To 40 | View Replies]

To: SeekAndFind

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.


46 posted on 02/18/2014 6:06:53 PM PST by Chewbarkah
[ Post Reply | Private Reply | To 1 | View Replies]

Dream on, Marxists.


47 posted on 02/18/2014 6:07:03 PM PST by Gene Eric (Don't be a statist!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

Gee, at one time not too long ago the title would have been considered satire....


48 posted on 02/18/2014 6:09:29 PM PST by Popman ("Resistance to Tyrants is Obedience to God" - Thomas Jefferson)
[ Post Reply | Private Reply | To 1 | View Replies]

To: datura
whoa, outstanding catch!!! there it is...
49 posted on 02/18/2014 6:13:59 PM PST by Chode (Stand UP and Be Counted, or line up and be numbered - *DTOM* -vvv- NO Pity for the LAZY - 86-44)
[ Post Reply | Private Reply | To 45 | View Replies]

To: KirbDog

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.


50 posted on 02/18/2014 6:17:20 PM PST by Tallguy
[ Post Reply | Private Reply | To 4 | View Replies]

To: SeekAndFind

Why not $1010 an hour?
Why not print enough money for us all to be millionaires?

Obama does not even have the slightest clue about how business works. Those who run a public company have a fiduciary duty to maximize profit. Choosing to make less profit intentionally is actually a crime.

Granted, they have discretion about how many employees are needed, but businesses are by nature profit-seeking entities. The number of employees is driven primarily by what makes the most sense when it comes to the bottom line.


51 posted on 02/18/2014 6:34:22 PM PST by unlearner (You will never come to know that which you do not know until you first know that you do not know it.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

Hey... Freepers wanted this guy and now they got him. Since no conservative will ever be “pure” enough... We should just get used to more of this. Cry me a river. I’ve got enough food and ammo to survive to the other side of whatever happens.

The tipping point has passed. Obama’s reelection was all you need to know that the number of takers now outvote the number of makers. There is no way home. There is no recovery from here. The only way out is through. The future is only after the fall.


52 posted on 02/18/2014 6:45:29 PM PST by Ramius (Personally, I give us one chance in three. More tea anyone?)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

I say before any national minimum wage increase is instituted they should try it for two years in individual states and see what happens. Pick 10 at random and eliminate the minimum wage. Leave it alone in 10 and raise it to $10.10 in 10.

After 2 years I bet the net effect economically in the 10 with no minimum is better than the other twenty.

The states are supposed to be the incubators of change so that’s where you try these ideas.

Of course it will never happen because the minimum wage is a politician’s dream law. Legislate an apparent benefit that you don’t have to pay for.


53 posted on 02/18/2014 6:47:21 PM PST by JeanLM (Obama proves melanin is just enough to win elections)
[ Post Reply | Private Reply | To 1 | View Replies]

To: unlearner
RE; Why not print enough money for us all to be millionaires?

They actually did even more than that in Zimbabwe...


54 posted on 02/18/2014 6:48:30 PM PST by SeekAndFind
[ Post Reply | Private Reply | To 51 | View Replies]

To: datura

You have it right.


55 posted on 02/18/2014 6:52:09 PM PST by onyx (Please Support Free Republic - Donate Monthly! If you want on Sarah Palin's Ping List, Let Me know!)
[ Post Reply | Private Reply | To 45 | View Replies]

To: SeekAndFind

So, you increase a poor worker’s wages by less than $100 per week, increase his electricity costs by $80 per week, increase his travel costs to get to work by about $30 per week, increase his food costs another $20 or so, and make him/her think you’ve done him/her a favor. And don’t forget the increase in health care costs.

Sheesh!


56 posted on 02/18/2014 6:57:44 PM PST by Real Cynic No More (Border Fence Obamacare!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind
In addition, businesses can adjust in other ways rather than reducing employment (for example, by accepting lower profit margins). CBO’s estimates do not appear to fully reflect the increased emphasis on all of these factors from the recent economics literature.”

Sheesh, the Whack-a-Doodle Administration at the helm. This is just effing unbelievable!

57 posted on 02/18/2014 6:58:03 PM PST by Chgogal (Obama "hung the SEALs out to dry, basically exposed them like a set of dog balls..." CMH)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Real Cynic No More; doc1019

And inflation is regressive—the poorer you are, the more it hurts. Rich people don’t really care if the price of food goes up. Why isn’t anyone pointing this out to the Obamafreak? I’ll tell you why. Because he doesn’t give a rat’s patootie about the poor.


58 posted on 02/18/2014 7:08:31 PM PST by firebrand
[ Post Reply | Private Reply | To 56 | View Replies]

To: SeekAndFind

Obamunist bump for later.........


59 posted on 02/18/2014 7:49:15 PM PST by indthkr
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

A company is formed to make money.
Anything that isn’t toward that goal is waste.
Giving profit away is stupid. Companies don’t exist for the benefit of employees; employees are there to make the company money.


60 posted on 02/18/2014 8:25:41 PM PST by BuffaloJack (Freedom isn't free; nor is it easy. END ALL TOTALITARIAN ACTIVITY NOW.)
[ Post Reply | Private Reply | To 1 | View Replies]


Navigation: use the links below to view more comments.
first previous 1-2021-4041-6061-69 next last

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson