CBO Report Affirms Wage Hike
Several days of absurd vitriol (Democrats) and ridiculous jubilation (Republicans) have obscured the truth: the Congressional Budget Office did not kill Obama’s wage increase. On the contrary, though Fox News, whose claim to “Fair and Balanced” reporting remains dubious at best, would like to think otherwise, the CBO’s 39-page ‘treatise’ on increasing the minimum wage suggests that although a hike would kill jobs, it would make life better for millions of low-income families.
Substance is Washington’s problem; rather than reading an entire report and contemplating it in full, the media and our glorious Congress prefer to cherry-pick the facts they like and bury the inconvenient truths. Republicans “seized” on the CBO’s conclusion that increasing the minimum wage would cost the economy hundreds of thousands of jobs. In a sense, they were right: the CBO report predicts the economy will shed 500,000 jobs if the minimum wage rises to $10.10/hour and 100,000 jobs if it rises to $9.00/hour. That said, we’re missing key details: depending on its magnitude, an increase would lift 300,000 – 900,000 people out of poverty; between 7.6 million ($9.00) and 16.5 million ($10.10) people would see an increase in their wages; and most families would see either an increase in real income or no change at all.
It’s important to read the fine-print. Sure, “Minimum Wage Hike Could Cost 500,000 Jobs” is a catchy title, and yeah, it’s accurate. The CBO did predict that a $10.10 minimum wage could kill 500,000 jobs. However, it’s inexcusable to look at one number and declare the debate over.
The pro/con is clear: on the one hand, the economy will shed jobs; on the other, a far greater number of people will experience higher wages and escape poverty. So what are we to do: support an increase or tell the Democrats to shut up? I say we back an increase, and here’s why.
First and foremost, raising the minimum wage is good politics. Purists may roll their eyes, but the truth is the truth. According to Gallup, 76% of Americans support raising the minimum wage to $9.00/hour. I have a feeling those people don’t appreciate the GOP’s stonewalling.
Politics aside, I also think raising the minimum wage is good policy. I admit that it could kill jobs, at least in the short-run; simple economics tells us as much. That said, the positives of doing so outweigh the negatives. As noted, depending on the magnitude of the raise, somewhere between 300,000 and 900,000 people will escape poverty and most will see an increase in real family income. As I do not want to hide facts, like my dear friends on the Hill, I will say this: the CBO predicts that families whose income is 6x the poverty threshold or more will lose between $4 billion (-0.1%) and $17 billion (-0.4%) in real income. Do I think the sacrifice is worth it? Yes.
I may be a conservative, but that doesn’t mean I want to crush low-income families with crony, laissez-faire capitalism. I think increasing the real income of those earning less than 6x the poverty threshold is okay, even if it means the ‘rich’ temporarily ‘lose’. In the long-run, wealthier low-income workers will spend more money in the economy and restore equilibrium. Over time, jobs will return and life will normalize, albeit with higher wages and no real ‘losers’.
Having said this, what do I want Republicans to do? It’s easy to get caught up in numbers and philosophy and forget about implementation. My solution is two-fold. Today, the party should support increasing the minimum wage to $9.00/hour, without automatic, inflation-based hikes. This increase should happen over the course of 2 years: $8.10 on July 1, 2015 and $9.00 on July 1, 2016. In the fall of 2016, Republicans should consider supporting automatic increases, based on inflation. For my part, I support raising the minimum wage to $9.00/hour and possibly linking increases to inflation in 2016.
I hope common sense rules the day. One number does not define this debate, nor should it. Raising the minimum wage demands informed dialogue, not the nonsense coming from Washington.
An increase would likely kill jobs, at least in the short-run; I get that. At the same time, millions of families would see their real income go up and hundreds of thousands of people would be lifted out of poverty. Overall, the net effect would be positive, and after a while, lost jobs would return. This is why, despite widespread Republican opposition , I support increasing the minimum wage. The short-term sacrifice may not be easy, but we’ll be better off in the end. If we don’t make these decisions today, we’ll wish we had made them tomorrow.