Posted by 09 July 2019
The “Fight for 15” is a popular idea within the Democratic Party and progressive political circles. A study released yesterday concluded that hiking the minimum wage to $15 an hour would indeed give some people a wage boost, but it would cost others their jobs.
The Congressional Budget Office (CBO) looked at three options for raising the minimum wage above its current level of $7.25 an hour. The three wage levels it looked at were $10 an hour, $12 an hour, and $15 an hour. Here’s what the CBO concluded about what the effects of a $15 an hour minimum wage would be:
In an average week in 2025, the $15 option would boost the wages of 17 million workers who would otherwise earn less than $15 per hour. Another 10 million workers otherwise earning slightly more than $15 per hour might see their wages rise as well. But 1.3 million other workers would become jobless, according to CBO’s median estimate. There is a two-thirds chance that the change in employment would be between about zero and a decrease of 3.7 million workers. The number of people with annual income below the poverty threshold in 2025 would fall by 1.3 million.
The CBO also concluded that a $15 minimum wage would have impacts on family income:
- Real earnings for workers while they remained employed would increase by $64 billion,
- Real earnings for workers while they were jobless would decrease by $20 billion,
- Real income for business owners would decrease by $14 billion, and
- Real income for consumers would decrease by $39 billion.
This study points to the trade-offs that would come from a minimum wage hike. Some workers would see an immediate wage hike, but other workers would lose jobs. Businesses and consumers would also be affected by such a hike. With this issue likely to be a part of the 2020 presidential race, the CBO’s study gives more information on the effects of a minimum wage increase to inform the debate.
Do you think that the federal minimum wage should be raised to $15? Is the trade-off of higher wages for some workers worth it if other workers lose their jobs?