Over 500 economists signed an open letter to the White House and Congress urging them to reject a federal minimum wage increase.
The list, which included four Nobel laureates and several veterans of past administrations, warned the minimum wage hike would cause economic damage.
“One of the serious consequences of raising the minimum wage is that business owners saddled with a higher cost of labor will need to cut costs, or pass the increase to their consumers in order to make ends meet. Many of the businesses that pay their workers minimum wage operate on extremely tight profit margins, with any increase in the cost of labor threatening this delicate balance,” read the letter.
It also cited the recent report by the Congressional Budget Office, which found that minimum wage increases would lead to lost jobs.
The Congressional Budget Office’s (CBO) most recent report underscores the damage that a federal minimum wage increase would have. According to CBO, raising the federal minimum wage to $10.10 per hour would cost the economy 500,000 jobs by 2016,” the letter staged.
The signatories added, “Many of these jobs are held by entry-level workers with limited experience or vocational skills, the very employees meant to be helped.”
“We have a moral obligation to fix poverty wages. And we can fix them. We can make work a way out of poverty again by raising the minimum wage — one of our nation’s simplest and most effective means to lift working families out of poverty,” Iowa Democratic Sen. Tom Harkin said in prepared remarks.
The senator explained that if Congress passes his bill, the Minimum Wage Fairness Act, people will be able to provide their families a more comfortable lifestyle.
“When it is fully implemented, the minimum wage will no longer be a poverty wage. It will lift families above the poverty line. And through the indexing mechanism, it will keep families above the poverty line,” said Harkin.
Douglas Holtz-Eakin, one of the letter’s signers and president of the American Action Forum, disputed Harkin’s assertions.
“Raising the minimum wage would be a very unwise policy,” he told The Daily Caller News Foundation.
Holtz-Eakin pointed out that the majority of individuals who earn minimum wage salaries are not living in poverty — a point also made by the CBO.
Despite this research, Hotlz-Eakin said Democrats continue to push for a higher minimum wage because “they want to appear as though they are on the side of the working person.”
President Obama vowed in his 2014 State of the Union to do anything within his power to raise the minimum wage.
In February, Obama used his executive powers to raise wages for new federal contract workers from $7.25 an hour to $10.10 an hour.
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