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ISSUE
Minimum Wage

Published:2014-Jun-16
Last Updated:2017-Jan-02
Principal Writer:Rob Dennis and Barry Shatzman

Issue Sections

Understanding The Issue
Issue Status
Our Analysis and Actions
What You Can Do
The Rumor Mill

Reported News

Labor: Conditions

Related Bills

Raise the Wage Act

2015 (S-1150)

Fair Minimum Wage Act

2013 (S-460)

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Didn't the CBO say that 500,000 jobs would be lost?

Sort of, but not really. In February 2014, the Congressional Budget Office (CBO) issued a report on possible effects of increasing the minimum wage to $10.10 per hour. This is the full quote from the report's summary...

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. 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.

The statement explains that the estimate simply is the middle ground between the equal possibilities of no job loss and the loss of 1 million jobs.

However, as we explain in the summary section for this issue, studies performed since 2000 have consistently shown negligible loss of employment correlating to minimum-wage increases.

Lastly, even if the higher number turns out to be accurate...

o The CBO also predicted in February that the U.S. economy will grow by 7 million jobs by 2018, so the result would be a smaller increase, rather than a decrease.

o Any reduction in jobs would need to be balanced against the more than 16 million workers who would have their wages increased by an amount enough to lift many out of poverty.

o Low-wage workers as a whole would be better off by between $19 million and $35 million.

For a more in-depth look at this issue, read the Center for American Progress analysis.

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