The Congressional Budget Office dealt the Obama administration its second blow in two weeks Tuesday, estimating the president’s proposed minimum-wage hike could come at the cost of 500,000 to 1 million jobs.
The White House responded with Jedi mind tricks shortly after the report came out.
Washington Free Beacon reported: “Our view is that zero is a perfectly reasonable estimate of the impact of raising the minimum wage on employment,” Council of Economic Advisers chairman Jason Furman said on a conference call with reporters.
When President Obama used an executive order recently to raise the minimum wage for federal contract workers, he called on Congress to boost the bottom pay for all other workers from $7.25 to $10.10 per hour.
The nonpartisan Congressional Budget Office considered two options: raising the minimum wage to $10.10 per hour in three steps, or raising it to $9 in two steps. Either plan would be completed by 2016.
The agency’s report said:
Once fully implemented in the second half of 2016, the $10.10 option would reduce total employment by about 500,000 workers, or 0.3 percent, CBO projects (see the table below). As with any such estimates, however, the actual losses could be smaller or larger; in CBO’s assessment, there is about a two-thirds chance that the effect would be in the range between a very slight reduction in employment and a reduction in employment of 1.0 million workers.
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The Congressional Budget Office had more bad news. The boost, estimated to cost $31 billion, would only affect a small percentage of the low-income families it’s meant to assist. The report said:
Just 19 percent of the $31 billion would accrue to families with earnings below the poverty threshold, whereas 29 percent would accrue to families earning more than three times the poverty threshold, CBO estimates.
Minimum-wage jobs are typically entry-level positions — gas station attendants, supermarket bag boys and fast food workers — that are usually filled by American youth and are not intended to support a family.
Dealing its final insult, the agency said:
Moreover, the increased earnings for some workers would be accompanied by reductions in real (inflation-adjusted) income for the people who became jobless because of the minimum-wage increase, for business owners, and for consumers facing higher prices.
Two weeks ago, the Congressional Budget Office estimated that the Affordable Care Act would cost an estimated 2.5 million jobs.
Democrats, from the president on down, are spinning the prediction as offering Americans an “exciting prospect” for Americans to engage in the arts and enjoy more leisure time with their families.
Former Congressional Budget Office director Douglas Holtz-Eakin appeared on Fox & Friends Wednesday and explained the agency’s findings, on both the Affordable Care Act and the proposed minimum wage hike. Watch his exchange with co-host Steve Doocy via Fox News.
If the trend continues, the United States will become a nation of equally-impoverished painters and musicians, panhandling for change on the streets — if not living in caves.
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