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.”
Folks, if you wanted to destroy this country could you come up with a better plan then the one Obama is gradually putting into effect?
I can’t. These traitors have had roughly a 100 years to plan and implement our downfall as a moral, productive, and educated society. I cannot think of anything they have so far failed to do to destroy this once great country.
If you can think of something they have failed to do or are not trying to do to bring us down, please let me know.
By the way, saying this guy does not understand business and has never had a real job might make someone believe that he is doing this thru ignorance, he is not. He knows very well what he is doing and ignorance is just cover.
NOBODY could be this stoopid, so I must conclude he is purely evil.
When I saw the title of this thread, I had to look at the link to see if it was one of those “semi-satire” articles. It’s getting so hard to tell these days.
“Businesses should accept lower profit margins,” says the president who has never spent so much as a single day in the private sector; has spent his entire life sucking away at the public teat; and evidently flunked Econ 101.
Yes. I was looking for good ol’ John Semmens’ siminews/semisatire handle on it. I can hardly wait to see his take on it.
How about if that $1.10 makes the company not profitable?
No that isn’t his main goal here, to destroy capitalism, his main goal here is to increase union wages, unions tie their wages to the minimum wage, increase that and you increase their wage too.
RE: How about if that $1.10 makes the company not profitable?
Obama: Close shop and we’ll take care of everyone so that they won’t have to be ‘locked’ to their jobs. They can be free to pursue their passions like writing Hip-Hop Poetry or creating films.
Isn’t there some tie in between the minimum wage and union wages? I may be wrong but I seem to remember reading somewhere that the union wage was calculated as being x% above the minimum wage. If this is the case, then not only will those earning the minimum be raised but so will most everyone else’s resulting in across the board increase in cost of goods and services and/or loss of profit for those who have invested so that item can be produced. No or to small a profit and no investment and production. Nice to have more money to spend but have nothing to spend it on!!
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.