CBO: $15 minimum wage would lead to 1.4 million lost jobs, impacting young, less educated the most

By Dan McCaleb | The Center Square

A $15 minimum wage would result in 1.4 million jobs lost and disproportionately hurt younger workers and those with less education, a new Congressional Budget Office report says.

President Joe Biden, U.S. Sen. Bernie Sanders and other Democrats have proposed raising the federal minimum wage to $15 an hour by 2025, more than double the current federal minimum of $7.25 an hour.

Biden says such a move would lift million of Americans out of poverty. While the CBO confirms the poverty-reducing impact, it also says it would hurt the economy.

“In 2025, when the minimum wage reached $15 per hour, employment would be reduced by 1.4 million workers (or 0.9 percent), according to CBO’s average estimate,” the report says. … “Young, less educated people would account for a disproportionate share of those reductions in employment.”

The higher minimum wage also would result in increased prices for consumers, including on health care, and businesses would be on the hook for higher unemployment premiums because more out-of-work people would seek the benefit.

“Under the bill, Medicaid spending would increase because the effects of increases in the price of health care services and increases in enrollment by people who would be jobless as a result of the minimum-wage increase would outweigh the effects of decreases in enrollment by people with higher income,” according to the CBO. “Prices, such as those for long-term services and supports and medical services, would increase as a result of negotiations that accounted for higher costs of labor facing health care providers.”

Other ramifications of a $15 minimum wage, according to CBO, would be less investment by businesses.

“Some businesses would invest in capital goods to replace workers,” the report says. “Other businesses, however, would be discouraged from constructing new buildings or buying new machines if they anticipated having fewer employees to use them. On average, over the 2021–2031 period, real investment would be slightly lower than it would be if current laws did not change, CBO estimates. That reduction in investment would reduce workers’ productivity and lead to further reductions in their employment.”

The Georgia Center for Opportunity, which advocates for those in poverty through free-market solutions, said the negatives of such a large minimum wage hike outweigh any benefits.

“Workers need immediate help, but doubling the federal minimum wage when Georgia small businesses are closing left and right is not the right answer,” Buzz Brockway, GCO’s director of public policy, said in a statement. “Recent data have shown us that unilateral minimum wage hikes hurt low-income, low-skilled workers the most. What’s needed for low-income Georgia workers is more than a temporary fix: What’s needed is practical training and credentialing to help them ‘upskill’ into better-paying jobs and careers.”

Image courtesy of Public domain

4 thoughts on “CBO: $15 minimum wage would lead to 1.4 million lost jobs, impacting young, less educated the most

  1. It was and is never about helping the poor. Putting people on welfare is much more to benefit of those growing government. This is a designed poverty trap, skillfully and expertly orchestrated by Vermont Government. They don’t want home owner ship, they don’t want self employment, they don’t want to foster a good education and strong families, all of these the building blocks for ending poverty and despair.

    Or we can follow the likes of Carl Marx, living in destitute slums of England our children starving all while we think we have the solution for world government, with out ever having worked or run a business. This is the father they are following. His philosophy is bankrupt just like his person. He rejected true wisdom, love and peace.

    Now people following his works find the same poverty and hopelessness. People should know whom they follow before blindly marching off a cliff.

  2. Why don’t we just increase the minimum wage to $20/hour. That way we can lose a few million more jobs while we’re at it.

  3. We are told big businesses can afford $15/hour and most pulling in billions each year in profit can well afford it…….and like the idea. It is a completely different story for Main Street and Mom and Pop owned businesses. In addition, what might “work” for New York city does not work for most tiny little town businesses in Vermont, particularly while struggling to stay afloat for months during mud season.
    I am quite sure our legislators have no idea how many retail stores will have to close. Sadly, it is being said that this is precisely the reason big businesses are encouraging the raise……to eliminate all competition. Donations to legislators by Mom and Pops are nill compared to the pay for play of the likes of Amazon.

  4. I came to Vermont 30 years ago to fix and run a bank that was in deep trouble. One of the first bits of advice I got was: “The Vermont economy was like a river a mile wide and an inch deep.” Meaning that there are few resources to call on when things got tough. This bit of Vermont wisdom came from F. Ray Keyser, Chairman of the bank and former Vermont Governor.

    Some may not have agreed with Ray as Governor, but he understood what the impact a minimum wage of $15 an hour would mean in a state with “an economy a mile wide and inch deep”……Big trouble for small family owned businesses.

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