• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • Minimum Wage Hike Would Eliminate 500,000 Jobs

    Newscom

    Newscom

    Surprise, surprise: An analysis released today found that a proposed minimum wage hike would eliminate hundreds of thousands of jobs.

    Today the Congressional Budget Office (CBO) announced it agreed with the Heritage Foundation’s analysis of President Obama’s proposed minimum wage increase. Of course the CBO did not put it that way. But the agency came to the same conclusion Heritage did: a $10.10 minimum wage has no historical precedent and would jettison hundreds of thousands of jobs.

    Many liberals argue that hiking the minimum wage will not cause employers to reduce hiring, but will do just the opposite. They contend it will increase demand, stimulate the economy, and boost hiring. They further argue the minimum wage stood above $10 an hour in the 1960s. Raising it to $10.10 an hour would (supposedly) only return it to this previous level.

    The Heritage Foundation found this analysis questionable. The most accurate inflation measures show that the minimum wage has never stood much above $8 an hour. So the President actually proposes hiking the minimum wage one-seventh above its all-time high. That would strongly encourage employers to hire fewer less skilled workers. Heritage Foundation analysis concluded that—even accounting for any stimulus effects—the proposed minimum wage hike would cost 300,000 jobs.

    The Congressional Budget Office’s new report concurs. The CBO finds the minimum wage has never stood much above $8 an hour—if analysts use the best available measure of inflation (as CBO and Heritage did). The CBO also found the effects of hiring cutbacks overwhelm any “stimulus” effects from the minimum wage. The agency concluded a $10.10 minimum wage would cost 500,000 jobs—with less than a fifth of those getting higher pay coming from families below the poverty level. If anything, Heritage’s estimates were conservative.

    The Congressional Budget Office confirms the President proposes an unprecedented increase in the minimum wage that will cost hundreds of thousands of jobs. This seems highly questionable, especially with the economy struggling with high unemployment.

    Posted in Economics, Front Page [slideshow_deploy]

    Comments are closed.

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.

    ×