CBO defends minimum wage report
The head of the Congressional Budget Office (CBO) on Wednesday defended a report that found hiking the minimum wage to $10.10 per hour would cost the nation a half-million jobs.
“Our analysis is quite consistent with latest thinking by economists,” CBO Director Doug Elmendorf said at a breakfast hosted by The Christian Science Monitor.
{mosads}He pushed back against criticism from the left and the White House, which criticized the CBO report as not reflecting the current consensus among economists.
“What we have done is to do a very careful reading of the literature and put weight on a wide range of results,” Elmendorf said Wednesday. “Economists that put more weight on some results will reach different conclusions.”
As an example, Elmendorf cited a 2013 University of Chicago survey of economists used by the CBO to reach its finding that the economy would have 500,000 fewer jobs in 2016 if the minimum wage was raised to $10.10 per hour from $7.25 per hour.
In the Chicago survey, 40 percent of the economists polled said an increase to $9 per hour would cause “noticeable” difficulty for low-wage workers looking for work. Thirty-eight percent disagreed with that statement.
The survey did not quantify the difficulty but the CBO believes its range of employment effects is consistent with the survey.
The White House and congressional Democrats have cited a January letter by 600 economists supporting the minimum wage as evidence the CBO is on the wrong track.
The 600 economists on that letter said raising the minimum wage to $10.10 per hour would have “little or no negative effect” on jobs.
Elmendorf said that letter does not represent a random sample of economists. He also said it never quantifies what “little or no negative effect” on employment would mean.
The CBO director added that in his view, 500,000 lost jobs could be said to be small compared to the overall size of the workforce.
The CBO report also found that raising the minimum wage to $10.10 per hour would lift 900,000 people out of poverty by increasing incomes.
Elmendorf explained the CBO went about its analysis by first looking at an increase to $9 per hour and then not indexing the wage to inflation after that.
This is similar to past hikes to the minimum wage. Under that scenario the CBO sees 100,000 jobs being lost.
“On the $9 increase that we analyzed, which is most comparable to what economists have looked at in the past, we think our estimates are completely consistent with the balance of the evidence,” Elmendorf said.
He then explained that the CBO multiplied the effects of increasing the wage to $10.10 based on studies of the numbers of workers that would be impacted.
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