President Obama wants Congress to raise the minimum wage over the next couple of years. He prefers a hike to $10.10.
Tuesday, the Congressional Budget Office issued a report saying that while raising the minimum wage could potentially lift 900,000 out of poverty, it could also cost from 500,000 to one million jobs. The CBO further found that hiking the minimum wage may increase the prices that the government pays for some goods and services, and could increase the already out-of-control budget deficit by a little bit over the next few years.
So, raising the minimum wage is not a panacea for helping workers or American companies, and is likely to have an overall slightly negative impact on the already ailing economy. The Obama White House reacted Tuesday to the CBO report, by urging American companies to accept lower profit margins.
Today, President Obama’s official Twitter feed tweeted this.
— Barack Obama (@BarackObama) February 19, 2014
It’s as if the CBO report never happened.
While believing that raising the minimum wage may play as noble, the fact is that the minimum wage is the wage earned by just 4.7% of America’s hourly paid workers. Most of us make the minimum at some early point in our careers, before either getting a raise or moving on to a job that pays more. The minimum wage is an entry-level wage. The minimum wage is not supposed to be a permanent wage. But if American companies are forced, either by Obamacare or raising the minimum wage, to accept lower profit margins, the minimum wage may become a permanent condition for a much higher number of workers.