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by
Bridget Johnson

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February 19, 2014 - 8:41 am

The director of President Obama’s National Economic Council said the White House just flat-out disagrees with the Congressional Budget Office finding that raising the minimum wage would cost jobs.

The CBO report says that “once fully implemented in the second half of 2016, the $10.10 option would reduce total employment by about 500,000 workers, or 0.3 percent, CBO projects.”

“As with any such estimates, however, the actual losses could be smaller or larger; in CBO’s assessment, there is about a two-thirds chance that the effect would be in the range between a very slight reduction in employment and a reduction in employment of 1.0 million workers,” the report adds.

Gene Sperling told MSNBC that they instead want to focus on “the primary thing in which we agree with them on and which everybody should agree, which is 16.5 million people would be getting a direct raise.”

“On jobs, you know, this is an area where I’d say we respectfully disagree with the CBO, though we have enormous admiration for the institution and their professionalism,” he said.

“But here is why. This is actually an area where economists have done very interesting, easy to understand research. They look and say, this was the first research done like this, Alan Krueger and David Carr did this, they looked at New Jersey when New Jersey raised the minimum wage and they said, ‘Wow, it’s on the border with Pennsylvania, so we can actually look and say did fast food restaurants in New Jersey, right on the border where they raised wages, did they lose more jobs than in Pennsylvania where wages stayed lower?’ And what they found was, not at all. There was no negative job impact.”

So based on that New Jersey-Pennsylvania burger study, Sperling says the CBO got it wrong.

“People are taught in Economics 101 that, you know, if price goes up there must be a little less supply and I think their mistake was not looking at the practical research that was done because then economists looked at 500 counties where there was this, you know, one state raised the minimum wage and on the other side of the county they did not, and all of them, they found that raised wages and that it did not hurt jobs,” he continued. “But it’s interesting to understand why, because there’s things you learn about human behavior when you actually study it as opposed to just look theoretically.”

“And let me just ask a question to those who want to criticize, we are about — we are less — we’re about where we were in the minimum wage as we were 50 years ago. So think about that, 50 years ago. That would be 1964. Can you imagine people in 1964 saying we can’t have a better minimum wage than we did in 1914 before World War I? So you’re telling me that 50 years later, we as a country haven’t improved our standard of living enough for people who are working hard so that we can say if you work full-time in the United States of America, and this is very important to the president’s heart, if you work full-time in the United States of America you should not have to raise your children in poverty.”

The CBO also found that the maximum impact from a minimum wage hike would not be felt by families below the poverty line.

“The increased earnings for low-wage workers resulting from the higher minimum wage would total $31 billion, by CBO’s estimate. However, those earnings would not go only to low-income families, because many low-wage workers are not members of low-income families. Just 19 percent of the $31 billion would accrue to families with earnings below the poverty threshold, whereas 29 percent would accrue to families earning more than three times the poverty threshold, CBO estimates,” the report states.

“People would say — basic economic theory would say that if you have to pay more for a worker, you might hire less workers,” Sperling said. “I’m sure they looked at the evidence but what I’m saying is that we as a country can afford to give people minimum wage.”

 

Bridget Johnson is a veteran journalist whose news articles and opinion columns have run in dozens of news outlets across the globe. Bridget first came to Washington to be online editor at The Hill, where she wrote The World from The Hill column on foreign policy. Previously she was an opinion writer and editorial board member at the Rocky Mountain News and nation/world news columnist at the Los Angeles Daily News. She is an NPR contributor and has contributed to USA Today, The Wall Street Journal, National Review Online, Politico and more, and has myriad television and radio credits as a commentator. Bridget is Washington Editor for PJ Media.

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Top Rated Comments   
I bet if you look closer at the New Jersey case you will find that either:
-a majority of workers were getting paid above minimum wage before the passing of the law.
-fewer fast food restaurants opened after the passing of the law.
-prices rose (since you aren't going to drive to the state next to yours to get food)
-the actual increase was small enough that it went unnoticed or hidden by other factors.
-a mixture of the above
43 weeks ago
43 weeks ago Link To Comment
I think it is 3 x minwage or 4 x minwage. So a minwage increase aids unions by a factor of 3 or 4.

Dims heart minwage for good reason. It aids their union campaign fund contributers, and is popular among many of the clueless. It is excellent politics for them, despite the economic stupidity.
43 weeks ago
43 weeks ago Link To Comment
Aren't some union contracts based on min wage? for example minwage+$20=unionrate

Follow the money...
43 weeks ago
43 weeks ago Link To Comment
All Comments   (22)
All Comments   (22)
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I bet if you look closer at the New Jersey case you will find that either:
-a majority of workers were getting paid above minimum wage before the passing of the law.
-fewer fast food restaurants opened after the passing of the law.
-prices rose (since you aren't going to drive to the state next to yours to get food)
-the actual increase was small enough that it went unnoticed or hidden by other factors.
-a mixture of the above
43 weeks ago
43 weeks ago Link To Comment
and tell me again, how so many get benefits, when reports are that only a small percentage of people get minimum wage, and how many at minimum wage are in jobs where tips take them well past minimum wage.
43 weeks ago
43 weeks ago Link To Comment
"we’re about where we were in the minimum wage as we were 50 years ago. So think about that, 50 years ago. That would be 1964."

Ummm, 30 years ago, in 1984, I earned minimum wage at $3.35/hour. It's now $7.50/hour. How is that the same?

Is this Common Core Math?
43 weeks ago
43 weeks ago Link To Comment
Shucks... no problem with this minimum wage stuff. Just hire more un/under-paid interns, and the problem is solved. The dems just luv them interns.
43 weeks ago
43 weeks ago Link To Comment
Aren't some union contracts based on min wage? for example minwage+$20=unionrate

Follow the money...
43 weeks ago
43 weeks ago Link To Comment
I think it is 3 x minwage or 4 x minwage. So a minwage increase aids unions by a factor of 3 or 4.

Dims heart minwage for good reason. It aids their union campaign fund contributers, and is popular among many of the clueless. It is excellent politics for them, despite the economic stupidity.
43 weeks ago
43 weeks ago Link To Comment
Last time the MW went up by 1.00 the result was the elimination of 600K MW jobs. Remember only 1% of the labor market makes MW. So I would say that if this unconstituional executive order is forced on the private sector, the CBO 500,000 number is a low ball number. Remember folks, the government can require all contractors to pay the federal minimum wage.

Just one problem.

The number of contractors for federal contractors with employees that make minimum wage is a decimal point and a few following zeros before you get to a fraction of a whole number.

The big losers by far on the war on the free market by BHO has been the kids. The entry level first job applicants. BHO has crushed this sector of the labor market. Should this proceed into the private sector that market will be wiped out. This is not part of this federal minimum wage issue... not yet.

But what do they care? Well they care a lot. About unions. Union wages are pegged as a percentage of the minimum wage. What are union dues pegged to? That would be union wages. Who is by far and away the largest financial donors to the commies like BHO, Pelosi, and Reid? That would be unions.

Now you know the rest of the story.
43 weeks ago
43 weeks ago Link To Comment
Unfortunately, raising the minimum wage for government employees / contractors ISN'T the same as raising the minimum wage for the private sector. The government just takes more out of YOUR wallet to pay the increase or prints MORE money. The private sector does not have these options and must reduce their workforce or raise prices to make up the difference.
43 weeks ago
43 weeks ago Link To Comment
I can't wait to hear Federal employees start complaining about the lack of service or lowered quality of food or increased prices in their cafeterias. I'm sure he never thought of that, but then, since he's never worked in private industry, he has no idea how profits work or what a bottom line is.
43 weeks ago
43 weeks ago Link To Comment
Yep. The tragedy of minimum wage is that the workers who are the least desirable (be it from age, inexperience, lack of skills, whatever) are to ones who suffer most. On the aggregate, the weakest candidates for a job are hired last- so if there are fewer min wage jobs, it is those weakest candidates who are most likely to be left behind.
43 weeks ago
43 weeks ago Link To Comment
and in a recent report the number of minimum wage earners is a little over 1% of the labor force, and more than half of those are people starting out and under the age of thirty, or in jobs that people rely on tips to increase that wage. Thus this is becoming a tempest in a teapot.
43 weeks ago
43 weeks ago Link To Comment
The facts and economics don't matter. They are buying votes. That's the purpose and the the CBO report is just cover for them.
43 weeks ago
43 weeks ago Link To Comment
Correct on buying votes. The CBO report isn't cover, but also not likely a good indication of the real pain of a min wage increase.
43 weeks ago
43 weeks ago Link To Comment
It's cover in that people are discussing the facts and figures and not discussing the Buying of Votes, which I find disgusting and corrupt. I don't want my tax dollars used that way.
43 weeks ago
43 weeks ago Link To Comment
Let's grant their premise for a moment- the idea that hiking the min wage will not produce job losses- and that they have evidence of seeing this in the real world.

If that happens, that means that employers have reduced their min-wage staff to the absolute minimum that they can continue to operate with. The empoyers cannot reduce labour hours ANY further before the business breaks.

So go for it. Keep hiking the wages. If employers cannot reduce their labour hours any further while operating, the alternative is to go out of business.
43 weeks ago
43 weeks ago Link To Comment
Further- in the standard supply/demand model, what this demand curve looks like is a straight line. What that also implies is that if the economy booms and the demand for labour curve moves up- no hiring takes place. Kind of reflects current experience, no?
43 weeks ago
43 weeks ago Link To Comment
' “As with any such estimates, however, the actual losses could be smaller or larger; in CBO’s assessment, there is about a two-thirds chance that the effect would be in the range between a very slight reduction in employment and a reduction in employment of 1.0 million workers,” the report adds. '

That's a Laugh!
If History is any example the number of Job Losses will be double what the CBO predicts in half the time.
43 weeks ago
43 weeks ago Link To Comment
Hey David Axelrod - why not raise it to $50 an hour - wouldn't that net out well?
43 weeks ago
43 weeks ago Link To Comment
Rich, you think too small. Just decree (that's how the President 'rolls' you know) that EVERYONE should have a salary of $1,000,000 a year.

Problem fixed! We would have a nation of millionaires!

It could work if you used Progressive Math.
43 weeks ago
43 weeks ago Link To Comment
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