CBO: Obama’s proposed minimum wage hike would cost 500,000 jobs by 2016

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President Obama’s proposed minimum wage hike to $10.10 per hour will cost 500,000 jobs, the Congressional Budget office found Tuesday.

The increase, which Obama touted in this year’s State of the Union address, would gradually up the minimum requirement from the current rate of $7.25 rate to $10.10 and could cause up to 1 million workers to lose their jobs, the CBO reported.

“This is a very weak anti-poverty tool and it’s hurting the kinds of people it’s supposed to help,” former CBO director Doug Holtz-Eakin told The Daily Caller News Foundation. “People that have low skills and are trying to find employment — if you raise the minimum wage, it prices them out of the market. That’s all the CBO’s reflecting.”

Additionally, just 19 percent of an expected total of $31 billion in increased earnings will go to families that current sit below the threshold of the federal poverty line. A larger share of increased earnings, 29 percent, would actually be felt by families that earn over three times the poverty threshold, indicating that Obama’s proposal will benefit middle-earners more than it will help those in poverty.

“If you look at the CBO report, what it says is that we’re going to take money away from people who make above six times the federal poverty line and give it to people below that level,” Holtz-Eakin explained. “This is a way for the administration to do its redistribution and make the private sector do it for them — it doesn’t even have to run through the federal budget.”

The White House enlisted Jason Furman, chairman of the Council of Economic Advisers, to push back against the report in a conference call. When asked whether the report would make it harder to pass a minimum wage increase, Furman replied that this report indicates that a large majority of workers will still benefit.

The administration is emphasizing the CBO finding that more than 16 million workers would see higher wages.

“That’s political spin over good economics,” Holtz-Eakin told TheDCNF about Furman’s claims. “Every time that economists have looked through the minimum wage more closely at the groups that are at the greatest risk of suffering unemployment, those groups feel the worst effects.”

The increase would boost 900,000 out of the 45 million people currently below the federal poverty line above that threshold.

The president has repeatedly sworn that a minimum wage hike will help low-earning workers. After raising the wages of government contractors to his proposed $10.10 per hour floor, he issued his refrain that “raising the minimum wage is good for business, and it’s good for workers, and it’s good for the economy.”

Obama also touted the hike in December by brushing aside its downsides, claiming that “there’s not solid evidence that a higher minimum wage costs jobs.” That remark already earned him a rebuke from the Washington Post Fact Checker.

A lesser wage hike up to just $9 would also have a detrimental effect, reducing employment by 100,000 jobs.

The report marks the second time the CBO has hit the Obama administration’s pet policies on jobs. A hotly debated CBO report several weeks ago found that the equivalent of two million full-time employees would back out of the workforce because Obamacare subsidies would prove more lucrative than employment.

The Obama administration continues to deny the report’s conclusion, however. Health and Human Services Secretary Kathleen Sebelius claimed Monday that “there is absolutely no evidence” of “job loss related to the Affordable Care Act.” (RELATED: Sen. Thune: Sebelius living in ‘parallel universe’ over Obamacare job losses)

“They’ve got a terrible track record on jobs and they change the subject every chance they get, to how important it is to address inequality in America,” Holtz-Eakin concluded. “But they have to have a policy that matches that rhetoric, and they don’t.”

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