1.4 million jobs lost

Raising the federal minimum wage to $15 an hour, as President Joe Biden has proposed, would cost 1.4 million jobs over the next four years while lifting 900,000 people out of poverty, according to a Congressional Budget Office report Monday. The impact on the employment rolls is slightly higher than the 1.3 million employment estimate from a 2019 report from the CBO, a nonpartisan agency that provides budgetary analysis to Congress. The number has been disputed by employment advocates who cite the benefits from the raise and say businesses will be able to handle the costs. Biden has acknowledged that the plan to phase in the new federal wage floor likely won’t make it through the $1.9 trillion spending plan he is pushing through Congress, though he remains committed to the increase. The CBO report estimates that the employment reduction would happen by 2025 and come as employers cut payroll to compensate for the increased costs. Along with the reduction in employment, the federal budget deficit would increase by $54 billion over the next 10 years, a fairly negligible level considering the fiscal 2020 shortfall totaled more than $3 trillion. The merits of a higher minimum wage Pay for all workers would increase by a net $333 billion, “an increased labor cost for firms considerably larger than the net effect on the budget deficit during that period,” the CBO report said. In the 2019 estimate, the agency said total family income would decrease slightly on net. “Higher wages would increase the cost to employers of producing goods and services,” the report said. “Employers would pass some of those increased costs on to consumers in the form of higher prices, and those higher prices, in turn, would lead consumers to purchase fewer goods and services,” the report found. “Employers would consequently produce fewer goods and services, and as a result, they would tend to reduce their employment of workers at all wage levels.”