The Congressional Budget Office released a report this week detailing the effects of a $10.10 minimum wage. The White House reacted with skepticism about sections of the report.
First, the facts. The CBO estimated that raising the minimum wage to $10.10 by 2016 would raise wages for 16.5 million Americans. The increased wages would also result in 500,000 lost jobs.
This data informs the important debate about the minimum wage that politicians in Washington should be talking about. Decisions regarding a minimum wage hike come down to a cost/benefit analysis; how many jobs are we willing to give up for a given increase in wages?
Instead of engaging in this discussion, however, the White House lashed out at the respected and non-partisan CBO. The administration argued that the employment numbers did not align with current economic theory.
The CBO responded that their job-loss estimate was actually conservative compared to what the literature suggests. Citing “publication selection bias,” the CBO revised their estimates down from what the published empirical evidence shows.
A White House blog about the report detailed the positive wage effects for American workers if the minimum wage were to be increased. In addition to increasing wages for 16.5 million workers, it would bring 900,000 Americans above the poverty line and provide an economic benefit via increased consumer spending.
The White House failed to mention the 500,000 lost jobs, instead referring to it as a “0.3 percent decrease in employment … CBO acknowledges that the employment impact could be essentially zero.” It is disappointing that the administration clouded the debate by only presenting numbers that align with the president’s political agenda, while leaving out data which is necessary for an informed debate.
So much for transparency out of the Obama White House.
Jonathan Howe
Sources:
Yahoo News
White House Council of Economic Advisors
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