Republicans have long stood against raising the minimum wage due to fears of the economic consequences. Those fears become increasingly explicit as the nonpartisan Congressional Budget Office (CBO) releases a July 2019 study confirming the impact minimum wage hikes would have on wages, jobs, and family income.
It is undeniable that a $15 minimum wage, as proposed under the Raise the Wage Act cosponsored by 205 House Democrats, would allow many Americans to see a raise in their wages. In fact, the CBO reports that 17 million Americans would qualify to earn $15 an hour and an additional 10 million Americans who earn slightly above $15 an hour would also see a wage increase.
While increasing wages and lifting individuals out of poverty is a good thing, the CBO described the impact of a $15 minimum wage as “unprecedented.” In fact, it provides a much bleaker outlook for our economy as a whole.
The CBO found that some of these wage increases would be offset by high joblessness rates. The report predicts that under the $15 option, 1.3 million workers who would otherwise be employed would be jobless in 2025. There is a roughly 66 percent chance the change in employment would lie between about zero and a reduction of 3.7 million workers.
Additionally, the report notes that business incomes would be reduced and prices would rise as higher labor costs are absorbed by business owners and passed onto consumers.
This has a ripple effect on the entire economy. The CBO projected national output would reduce slightly through the reduction in employment and a corresponding decline in the nation’s stock of capital, such as buildings, machines, and technologies.
It can be easy to dismiss these large scale economic impacts as inconsequential to the average American in need of a wage increase; but the CBO report further explains that, on a micro-level, individual family units will be negatively impacted by the wage increase.