Democrats say they have 200 votes in the House to raise the federal minimum wage from $7.25/hour to $15. But a new study from the non-partisan Congressional Budget Office (CBO) says that in addition to lifting 1.3 million households above the official poverty line, raising the minimum wage would kill up to 3.7 million jobs. Even if you think low-paid workers should make more, is there a better way to do it than with the long-arm of the federal government?
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Raise Minimum Wage to $15: Lift 1.3M from Poverty, Kill 1.3M Jobs, CBO Says
Democrats say they have 200 votes in the House to raise the federal minimum wage from $7.25/hour to $15. But a new study from the non-partisan Congressional Budget Office (CBO) says that in addition to lifting 1.3 million households above the official poverty line, raising the minimum wage would kill up to 3.7 million jobs. Even if you think low-paid workers should make more, is there a better way to do it than with the long-arm of the federal government?
21 replies on “Raise Minimum Wage to $15: Lift 1.3M from Poverty, Kill 1.3M Jobs, CBO Says”
It always boggles the mind when so many of these politicians prescribe what and/or how businesses should pay their employees. Especially considering the vast majority have never run a business. That isn’t necessarily a requirement, but when you lack common sense, experience helps.
That’s exactly what got our healthcare system into this mess, of course: government bureacracy creating wage controls, forcing businesses to start offering non-wage “benefits” in order to attract good employees, since they couldn’t pay them what they were worth in the market conditions of the time.
So true Laura. Don’t forget that anytime the government gets involved the price goes up. Look at the price of a college education anymore. Like Reagan said “government is the problem”
This notion that significantly increasing the minimum wage will cause large swathes of the population to be shifted from employees to independent contractors is one of the best reasons I’ve ever heard to increase the minimum wage.
1. Independent contractors don’t get federal income tax withholding from their paychecks. They have to write a check to the IRS every quarter. Imagine what would happen if several million people suddenly had to start paying the IRS directly four times a year.
2. Independent contractors don’t get benefits. Most significantly, they don’t get employer-based health insurance. This will help create the market conditions for a cash-based healthcare system. Imagine, paying money directly to your doctor for services actually provided instead of pre-paying for a laundry list of services you never use, most of which money goes to bureaucrats (government and insurers). Couple that with actual insurance for catastrophic events (such as accidents, heart disease, or cancer), and healthcare problem solved. Getting doctors to disengage from the government/insurance teat is apparently what is even now still interfering with market-based solutions emerging. A sudden large set of people losing pre-paid employer-based insurance might be what the market needs to kick-start it. It might even get employers out of the “healthcare insurance” benefits racket for good.
So incrementally increasing the minimum wage is the market enemy. Using Bill’s argument to take it to a greater extreme could provide the jolt the market needs.
(N.B. I speak as someone who has been without health insurance since Obamacare sent my plan into a death spiral. I am still waiting for lawmakers to make catastrophic insurance coverage feasible again, not to mention removing the Obamacare rule that doctors have to charge cash patients the same that their lowest “healthcare insurance” negotiated price for a given service.)
What the politicians don’t seem to realize that the true minimum wage is $0.00 – which is what those who lose their jobs from mandated wage increases are making.
My take is that raising the minimum wage has little to do with worker welfare, at least for the majority of politicians. Those lucky or valuable enough to keep their jobs may end up moving into a new tax bracket, and pay a larger percentage of their earnings to the gov’t, they will likely lose benefits, and the cost of goods will increase, leaving them with less disposable income all round. But the gov’t gets those taxes. For those out of work, well, they will probably become dependent on that same gov’t, which increases gov’t power over their lives, and you can guess which party they’ll likely vote for to keep those gov’t food pellets coming down the chute. Maybe I’m too cynical but I think raising the minimum wage is more about keeping revenue up while expanding a D voting underclass, than caring for “the little guy”.
Maybe the loss of jobs doesn’t bother any of these clowns; anything to reverse the economic growth under Trump!
The truth is our “betters” don’t give a rat’s rear end about you, me, the guy next door, or the poor. The reason we need more money to get by is because the money we have is worth less and less. That’s because of inflation, which is 100% caused by government spending borrowed “money,” which is created on the spot by the Fed. It’s called monetized debt. Look on your currency. They used to be certificates, (theoretically) redeemable for Constitutional money – silver or gold. Now the pretense is gone and they are labeled Federal Reserve Notes. Bank notes. Loans never meant to repaid. Money supply increases, the value of your savings decreases. It’s legalized theft.
I recommend for your reading pleasure (or nightmare) “The Creature From Jekyll Island.”
Politicians have to be the stupidest people on earth, yet stupider people vote for them.
From my understanding, only like 3% of the workforce is actually making minimum wage…. this tells me that the economy and the laws of supply and demand are already well at work
I liked that loop of indexing the min wage to the median wage. Keep pulling that floor up behind you and guarantee increases every year… at least until stagnation caps the top wages for a while.
What needs to change is the elimination of the income tax and reintroduction of supply and demand. Our government has been interfering in the economy with artificial props for too long and needs to get out of our knickers. Generations of Americans have been bred to depend on government largesse because “The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.” – misattributed to Alexis de Tocqueville. This will only accelerate a complete breakdown into totalitarianism, a la communist China. Welcome to the brave new world.
I can tell you right now what would happen where I live at my job. A whole bunch of lower paid employees would be laid off and the remaining ones would be asked to do more. And the prices of the product would go up.
What happens to the excellent performers in business (employees). There are always employees who excel in their performance. What if they are already earning $15/hr directly as a result of their performance on the job. But the employee next to him, who does ok, but doesn’t excel is making $12/hr. The employer will be forced to give Employee #2 $15/hr, but can he afford to give another raise to the Employee #1 so he can continue to recognize Employee #1’s performance.
Yuppers.
Seattle, WA. As soon as they announced the passage of the $15/hr minimum wage, 30 businesses went under. When it went into effect 30% of the minimum wage businesses went under. Now the city is in shambles.
The governor got onboard to raise Washington state’s minimum wage incrementally to $15/hr. So now businesses are dropping across the state. How many more examples do the Democrats need?
Same thing happened in Flagstaff, AZ. The state had a measure on the ballot in 2016 to raise the minimum wage from $8.05/hr to $12/hr by 2020. But the Flagstaff city council took it one step further and pushed their local minimum wage to $15/hr. I don’t recall the numbers, but almost immediately many small businesses closed their doors.
While I’m not in Flagstaff, we have seen price increases from most business all over our county.
You’re making the mistake of thinking they care about the outcome. Remember, only intentions matter to dems. As long as they intend to help min wage workers the actual outcome doesn’t matter. They live life ignoring reality.
#FightForFifteenDaysSeverance
People just don’t get it.
1. Where does inflation come from? Prices of goods and services increase.
2. Why does the price of goods and services increase? Costs increase, causing profit to decrease below acceptable levels resulting in the need to increase prices of goods and services.
3. What is the largest cost of doing business? Labor
What happens if the price of goods and services go up beyond what the market can accept?
1. Attempt to reduce labor costs through automation or
2. Business goes out of business.
Also it’s technically not legal to “hire” employees as independent contractors, at least that was true when I was working in California. If you are controlling the person performing the job (I don’t remember the exact wording) you can’t pay them as an independent contractor. Reasons being is primarily the company is avoiding the requirements of both following labor laws and paying employer related taxes. It is why companies often hire employees through temp agencies though. They pay higher hourly rates but avoid the burden of having to deal with the tax issues, and let the temp agencies deal with that.
The business can also reduce quality or increase the price. Reduce cost or increase price.largest cost is normally labor.
Given that the increase is more than doubling the minimum wage in many states who haven’t already increased their state’s minimum wage, it would be extremely difficult to compensate for that drastic of a cost structure change with an offsetting decrease in quality.
If prices are increased, one of two things will happen.
1. If it is a necessary product that can’t be replaced by a lower cost alternative or eliminated entirely, the result will be inflation. As I’m sure you’re aware, inflation then eliminates the gain a worker has from having received the hourly wage increase since the cost of living is now higher. It becomes a vicious cycle of chicken and egg.
2. If the item isn’t a necessity, then the people will have to decide if they are willing to pay the higher price. If not, then it is likely that the company will not be in business for long.