The Daily Caller

The Daily Caller
McDonalds. Photo: Getty Images McDonalds. Photo: Getty Images  

White House rushes to attack CBO report on minimum wage increase

Photo of Neil Munro
Neil Munro
White House Correspondent

Democrats rushed to damn the Congressional Budget Office’s Tuesday report on raising the minimum wage, which predicts income gains for tens of millions of low-skill workers, but also job losses for roughly 500,000 people.

The minimum wage is a top priority issue for Democrats, who are looking for ways to increase November turnout by low-income voters, including many African-Americans and Hispanics.

Good studies show that a wage increase to $10.10 an hour, up from $7.25, would have no impact on employment, said Jason Furman, the chairman of the president’s Council of Economic Advisors.

“Zero [job losses] is a perfectly reasonable estimate,” Furman said Feb. 18.

Instead, the wage increase will improve workers’ diligence and productivity, he said, adding that “the [CBO] report very much does make the case for a policy that benefits more than 16.5 million workers.”

“CBO confirms that many millions of workers with low or modest incomes would get significant income gains… for virtually no budget cost,” said Robert Greenstein, president of the Center on Budget and Policy Priorities, a left-of-center think-tank.

“The number of workers [who gain is] 50 times the number of workers on the job-loss side,” he added.

His group estimates that a minimum-wage increase would create 85,000 more jobs that it would eliminate, because low-wage workers would have money to spend in the market.

But the business groups are fighting back hard, partly because they’re maintaining solidarity with the low-wage restaurant and retail industries.

“The CBO has confirmed what the vast majority of careful, peer-reviewed economic research has also shown: Raising the minimum wage will reduce job opportunities for the least-skilled, at a time when unemployment for young adults has been above 20 percent for more than five years,” according to a statement from Michael Saltsman, research director at the Employment Policies Institute.

Democrats are eager to push the minimum wage, partly because it offers direct gain for their base of lower-income voters.

Last year, Democratic legislators told The Daily Caller they would push for a minimum wage increase after the passage of a bill offering an amnesty to 12 million illegal immigrants. 

In California, Ron Unz, a libertarian businessman is also pushing to put a $12 minimum wage ballot up for a vote in November. The $12 wage would reduce indirect subsidies to companies’ payrolls — such as the Earned Income Tax Credit — and push investors to fund companies that combine workers and technology to raise productivity and wealth, he told TheDC.

But GOP legislators are likely to hold the line against a $10.10 wage, at least until the November election, said Greenstein. “More likely, actual action will come after this year, rather than during it,” he added.

Follow Neil on Twitter