CBO predicts 500,000 job losses from $10.10 minimum wage

by Walter Olson on February 19, 2014

Study here and coverage here, here, and here. The actual number in CBO’s view could be as low as near-zero or as high as a million jobs lost. “Spin it as you wish, we should not have a major party promoting, as a centerpiece initiative and for perceived electoral gain, a law that might put half a million vulnerable people out of work, and that during a slow labor market.” [Tyler Cowen] And imagine indexing the $10.10 number to ensure that its damage goes on indefinitely. More: Ramesh Ponnuru, Philip Klein, Emily Ekins, Trey Kovacs (role of unions’ self-interest). Earlier on minimum wage.

{ 10 comments }

1 Ella 02.19.14 at 7:45 am

Right, why bother talking about raising the minimum wage. It’s not like the currently employed at $7.25 already need government programs to feed their children and pay their rent. Oh wait…

2 Richard Nieporent 02.19.14 at 9:46 am

@Ella

Why are all of those teenagers living on their own and having children? In other words what percentage of minimum wage earners are married adults as opposed to teenagers, and how long do those adult minimum wage earners stay at the minimum wage level? Also do you think they will be better off if the minimum wage was higher but they lost their minimum wage job?

3 Boblipton 02.19.14 at 9:59 am

The good news is that the job loss would be invisible. People would simply not have jobs. No politicians would be injured as a result.

Bob

4 Jim Collins 02.19.14 at 10:27 am

Ella, raising the Minimum wage isn’t going to help. It all comes down to buying power. If you raise the Minimum wage to $10.10 per hour, prices are going to rise accordingly and you are right back where you started at. It solves nothing.

5 wfjag 02.19.14 at 11:20 am

I propose that the federal government conduct a grand experiment in federalism and democracy. Several states and local governments have already raised the minimum wage in their jurisdictions. Declare that this is a matter of state and local concern; respect the 10th Amendment; and await the results. Does an increased minimum wage create jobs and wealth, as its proponents claim, or generally just shift wages from the low wage earners unfortunate enough to end up unemployed when the minimum wage increases, to those low wage earners who remain employed at jobs paying minimum wages, which is the opponents’ chief contention.

If raising the minimum wage (including allowing for variances in how quickly it is raised and the level to which it is raised) creates jobs and wealth, then other states and localities will follow suit. If it does not, then those which have raised it will lose jobs as businesses migrate to other places and start-up businesses will be created at lower rates.

6 gitarcarver 02.19.14 at 1:18 pm

There is another unspoken issue here.

“What right does the government has putting conditions into contracts and agreements between two people?”

If the government can say to a private company “you have to pay this person x amount per hour,” why stop there?

“You have to pay plumbers y amount per foot of pipe run.”

“You have to pay z amount for each roof that is replaced.”

“You have to pay this or that amount based on what we tell you.”

Where does it end?

7 Jason Barney 02.19.14 at 2:09 pm

The government is approaching this all wrong. They should simply cap prices on goods and services instead of setting a wage floor. That way, retirees on fixed incomes or those otherwise living on savings can benefit too—not just those fortunate few lucky enough to have a job.

All meals served at a restaurant would have to conform to the per diem rates published by the GSA. GSA could publish similar rate schedules for sporting events, parking lot valets, and ground beef. This would establish a fair “living price index” we could all agree on.

8 VMS 02.19.14 at 11:17 pm

Perhaps the proponents of raising the minimum wage should retake economics 101.

9 Canvasback 02.20.14 at 12:25 am

@ Jason Barney. I hope your kid slapped you for that one .

10 marcoc73 02.20.14 at 9:16 am

The minimum wage should be tiered and be a training wage. I’ve known and hired many bright, diligent teenagers, and none of them are worth $7.25, or $8, or $10.10, for at least the first week. A small business hiring teenagers is just throwing money away while teaching teenagers to talk politely to everyone, follow instructions, dress neatly, show up on time, shave, and comb their hair.
(Yes, I know, sounds like I should yell at them to get off my lawn.)
I’d love to be able to pay them $3 or $4 per hour, then after the first 40 hours if they work out, I’d happily bump up their pay. In the various businesses I’ve owned and managed, we never had anyone paid at minimum wage after 90 days. The slackers self-select for termination. The real workers are worth more.

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