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.
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!
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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.
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.
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.
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.
You have it right.
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!
Sheesh, the Whack-a-Doodle Administration at the helm. This is just effing unbelievable!
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.
Obamunist bump for later.........
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.
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