Marianas Variety

Last updateThu, 19 Sep 2019 12am







    Tuesday, September 17, 2019-8:37:54A.M.






Font Size


OPINION | How many jobs would the $15 minimum wage kill?

THIS is one political promise it’s OK to break.

Democrats pledged a $15-an-hour minimum wage while campaigning in 2018, and all but three of the party’s 2020 presidential candidates endorse the increase. But a new report from the Congressional Budget Office finds the policy could leave nearly four million workers without a job.

This week’s analysis is an update of CBO’s 2014 analysis of a $10.10 minimum wage, which said one million workers would be pulled out of poverty at the cost of half a million jobs. That conclusion was enough to tank the proposal; a Bloomberg poll at the time found that 57 percent of Americans viewed the jobs trade-off as “unacceptable.”

Democrats have responded to CBO’s wage warning by ignoring it. The Raise the Wage Act of 2019, introduced in January, would set a $15 minimum wage by 2024. The trade-offs from this legislation are even worse than in 2014. CBO finds a $15 minimum wage would pull 1.3 million workers out of poverty at the cost of 1.3 million jobs in the median scenario, and 3.7 million jobs in the worst-case scenario.

Put differently, as many as three people would lose their jobs for each person no longer in poverty.

The CBO’s conclusions, based on a review of dozens of empirical studies, even suggest the title of the Democrats’ bill is a misnomer. The Raise the Wage Act would reduce real family income by $9 billion once phased in, as reductions in employment (among other impacts) offset the increase in some workers’ pay.

The estimated job loss from a $10 minimum wage — 100,000 in the worst-case scenario — is more modest this time around. Thanks to natural wage growth and a tight labor market, thousands of businesses offer a starting wage of $10 or more, with no federal mandate. (Some states and cities, such as California and New York, have independently enacted new wage mandates; the CBO’s analysis doesn’t account for job losses in areas unaffected by the federal legislation.)

Democrats can’t afford to be cavalier about the projected impacts of $15, even in a robust economy. The CBO explains that some displaced workers could face long-term harm “if a minimum-wage increase keeps them from developing skills.” The 19.9 percent unemployment rate among young black Americans is still more than five times the national rate. And more than 50 counties still have an unemployment rate of 7 percent or higher. This includes Luna County, N.M., Apache County, Ariz., and Willacy County, Texas — counties in districts of so-called Blue Dog Democrats, who will determine whether the Raise the Wage Act passes the House.

The CBO isn’t the first nonpartisan research unit to find negative effects from $15, but it’s the least politically convenient one. Democrats have repeatedly touted the CBO’s reports in arguing against President Trump’s policy proposals; even the party’s progressive wing has described CBO research as “invaluable.” The party’s moderates now face the unenviable task of voting for a bill panned by their favorite economists.

Mr. Saltsman is managing director of the Employment Policies Institute.