President Obama's call to raise the federal minimum wage could help lift 900,000 workers out of poverty, but at a cost of as many as 500,000 jobs, according to an analysis released by the non-partisan Congressional Budget Office (CBO), says USA Today.
- CBO examined the budget impacts of raising the minimum wage to $9 per hour and $10.10 per hour.
- The report concluded that an increase to $9 per hour would lift 300,000 workers above the poverty line, but cost 100,000 new jobs as employers are expected to reduce workforces to make up for higher wages.
- An increase to $10.10 per hour would lift 900,000 workers above the poverty line, but cost 500,000 jobs.
The CBO report acknowledges that long-term conclusions on the effect of the minimum wage are difficult to predict. In 2007 -- the last time Congress voted to raise the federal minimum wage to the current $7.25 rate -- CBO reported that "the potential employment and unemployment impacts of raising the federal minimum wage rate to $7.25 per hour are difficult to predict, but are likely to be small."
Source: Susan Davis, "CBO Report: Minimum Wage Hike Could Cost 500,000 Jobs," USA Today, February 18, 2014. "The Effects of a Minimum-Wage Increase on Employment and Family Income," Congressional Budget Office, February 18, 2014.