Raising the Minimum Wage for Working Men and Women in California and the Rest of America

Seeing Through the CBO's Minimum Wage Fog

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Harry Truman once asked for a one-armed economist in the hopes of never again having to hear “on the one hand, this” and “on the other hand, that.” Given the recent Congressional Budget Office (CBO) report on the effects of the minimum wage — one chock full of “on the other hands” — the American people can empathize with President Truman. Even worse, both sides of the aisle are spinning the report to claim victory, creating a fog around minimum wage policy that may further discourage a Walmart-influenced Congress from taking any action. Given the miserly state of the minimum wage today, such a can’t-do attitude is unacceptable. Here are five key observations about the minimum wage to help members of Congress see through the “something for everyone” fog generated by the report:

First, the Congressional Budget Office’s report on the effects of a minimum wage increase to $10.10 fails to reflect the modern economic consensus on a minimum wage raise’s employment effects. The weight of evidence from the economics literature has found that increases in overall business costs resulting from moderate wage increases are modest and can be absorbed by slight price increases, lower employee turnover costs, or adjusting distribution of companies’ total revenues. In fact, two recent meta-studies of dozens of papers over the past years — the first by economists Hristos Doucouliagos and T.D. Stanley in 2009 and the second by econometrics experts Paul Wolfson and Dale Belman in 2013 — have concluded that modest minimum wage increases have little to no significant negative employment effects.

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Fourth, the partisan fight over the CBO report obscures the bipartisan nature of the minimum wage raise coalition. The most aggressive minimum wage effort in the country now is led by a conservative — Republican Ron Unz, who is pushing for a $12 minimum wage in California in an effort to ensure that Golden State taxpayers are not, in providing public assistance to those who already work full time, essentially subsidizing the low wages of big corporations. Bill O’Reilly, Phyllis Schlafly as well as a majority of Republicans polled join 80% of Americans in supporting a minimum wage increase.
• Category: Campaign, National • Tags: Ralph Nader