Raising the federal minimum wage to $15 an hour would cost 1.4 million jobs, but would also lift 900,000 people out of poverty, according to a new study by the Congressional Budget Office (CBO).
The Raise the Wage Act would lead to increases in the price of goods and services as employers paid higher wages, and would also cause the federal government to have to pay more for workers like those who provide long-term healthcare, the CBO said. However, it would also have to spend less on certain welfare programs including those for food, according to the study published on Monday. The act could cost the government $54 billion over the next 10 years, the report said.
Touted by Democrats including Sen. Bernie Sanders, the Raise the Wage Act would increase the minimum wage every year from today's $7.25 until it reached $15 in 2025. Democrats introduced the bill last month, and it does not have Republican support. Sanders advocates pushing the act through using a procedure known as budget reconciliation, which would allow Democrats to get a budget-related bill through the Senate using the Democrats’ narrow majority, without Republican support, as part of a pandemic relief package.
Economists questioned how accurate the CBO’s estimates were, with Heidi Shierholz, director of policy for the left-leaning Economic Policy Institute, saying in a Twitter post that the CBO’s estimates were “really out there” and out of line with previous studies that showed job losses far lower than what the CBO predicted.
The EPI’s own research was heavily in favor of raising the wage, and a recent study by economists from the University of Massachusetts and University College London found that past minimum wage increases did not lead to job loss.
The CBO report, however unlikely, had a fan in Sanders, who said in a Twitter post that the its estimate of the bill’s budget impact shows that “we can clearly raise the minimum wage to $15 an hour under the rules of budget reconciliation.”