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Democrats laud wage-report poverty findings, dispute employment effects

WASHINGTON — Disputing the report’s jobs assessment is critical for Democrats who want to try moving a minimum wage increase through Congress this year.

Disputing the CBO’s jobs assessment is critical for Democrats who want to try moving a minimum wage increase through Congress this year.
REUTERS/Larry Downing

This is one in a series of articles funded by a grant from the Northwest Area Foundation.

WASHINGTON — Tuesday’s minimum wage report from the nonpartisan Congressional Budget Office forced wage hike supporters into a bit of a balancing act.

On the one hand: Great news, a minimum wage increase will lift 900,000 people out of poverty and raise wages for 16.5 million workers. On the other: CBO is an outlier in warning a $10.10 minimum wage could imperil 500,000 American jobs.

That was the line of the day from most major Democrats who support raising the wage, from President Obama’s economic advisers (who, in what the New York Times called an “unusual twist,” publicly disputed the CBO) on down.

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Disputing the CBO’s jobs assessment is critical for Democrats who want to try moving a minimum wage increase through Congress this year. Many advocates already acknowledge they’re unlikely to find much success in Washington, given Republican’s already stout opposition to a wage increase, on the grounds that it will hurt job creation.

Take the response from Reps. Keith Ellison and Raul Grijalva, who chair the Congressional Progressive Caucus, which typifies Democrats’ response:

Too many Americans are working seventy or eighty hours a week and living in poverty. Working in a job that pays the federal minimum wage should mean a working parent can take care of her kids. The CBO report released today confirms that paying Americans a wage they deserve helps hard working families get out of poverty and increases wages for those who need it most.  

According to the report, increasing the federal minimum wage to $10.10 will help 900,000 people get out of poverty and will mean a raise for nearly 25 million people. This means families will have more in their pockets to spend on food, rent and clothes for their children, which is good for them and for our economy.

But:

Six hundred economists, including seven Nobel laureates, wrote a letter stating that recent studies have found that ‘increases in the minimum wage have had little or no negative effect on the employment of minimum wage workers.’ The CBO itself is careful to note that the projection of potential jobs lost in the report is an estimate and could be a ‘very slight reduction in employment.’

Minimum Wage: Too low or too costly?The letter referenced here came from the liberal Economic Policy Institute in January, just before Obama called for a higher minimum wage in his State of the Union. Other research — as the Washington Post references here — concludes the same thing, though conservative think tanks and business groups have released reports suggesting minimum wage hikes do cost jobs.

As Ellison and Grijalva note, CBO’s report hedges significantly when it comes to its predictions, noting that actual job losses could be anywhere between “very slight reductions” and 1 million. But the report’s initial conclusion is probably enough to solidify GOP resistance to raising the wage. When the U.S. Senate returns to work this month and takes up a minimum wage increase, CBO’s analysis could be Republicans’ front-and-center argument against it.

And if a wage hike somehow succeeds in the Senate, it will find few Republican allies in the GOP-controlled house.

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“This report confirms what we’ve long known: While helping some, mandating higher wages has real costs, including fewer people working,” a spokesman for House speaker John Boehner said Tuesday, just moments after the CBO report came out. “With unemployment Americans’ top concern, our focus should be creating — not destroying — jobs for those who need them most.”

Devin Henry can be reached at dhenry@minnpost.com.