Obama continues duel over minimum wage estimates

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Breanna Deutsch Contributor
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In a Monday op-ed, President Obama claimed his proposed minimum wage increase would “lift millions out of poverty.”

This number conflicts with a February estimate by the nonpartisan Congressional Budget Office (CBO).

Obama wrote that passing a wage increase, “would lift millions out of poverty immediately, and help millions more work their way out of poverty, without requiring any new taxes or spending.”

According to the study released by the CBO earlier this year, a federally mandated $10.10 minimum wage would move “about 900,000 people, on net, above the poverty threshold.”

A report conducted by the president’s Council of Economic Advisers around the same time predicted a number over twice that of what the CBO estimated.

Obama’s team concluded that “Raising the minimum wage to $10.10 an hour would raise incomes for an estimated 12 million people now in poverty, lifting two million of them out of poverty.”

“The President is giving false hope with his promise that ‘millions’ of Americans will no longer be in poverty if the minimum wage is hiked to $10.10,” Michael Saltsman, the research director at the Employment Policies Institute, told The Daily Caller News Foundation.

He explained in an email, “The nonpartisan Congressional Budget Office — which isn’t focused on the 2014 midterms — estimates that just 900,000 people will be pulled out of poverty, and only at the cost of up to one million jobs.

“A policy trade-off where one person could lose their job for every person pulled out of poverty doesn’t seem like a good deal for the American people,” Saltsman added.

Researchers at the CBO expect that if wages are bumped to a mandated minimum of $10.10 an hour, the number of jobs available in the labor market would shrink.

The CBO report read, “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.”

White House economists, on the other hand, predicted that wage increases would have “No discernible effect on employment.”

The president said in his article that not only would wage hikes not hurt the labor force, it would actually boost the economy and prove beneficial for businesses.

“Profitable businesses like Shake Shack, which starts its employees at $9.50 an hour, and Costco, where workers make at least $11.50, pay higher wages, too — not out of charity, but because it reduces employee turnover, boosts productivity and improves the bottom line,” wrote Obama.

Saltsman told TheDCNF that these examples are misleading.

“At McDonald’s, a basic double cheeseburger sells for about a $1.60. At Shake Shack’s DC location, the cheapest double cheeseburger sells for over four times that amount,” said Saltsman.

However, he explained, if a “typical fast food restaurant thought they could dramatically increase their prices to that level without a nosedive in sales, they would have done so already. It’s elitist and out-of-touch to think that a high-end burger concept in DC can determine pricing for a diner or franchisee in middle America.”

Since the president first urged Congress to raise the federal minimum wage in 2013, six states passed laws to raise theirs. And last week, lawmakers in Connecticut voted to phase in a state minimum wage of $10.10 an hour.

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