February 18, 2014
CBO: 'Obama's Minimum Wage Increase Would Cost 500,000 JobsTopics: Our Troops are winners, Political News and commentaries
For what it's worth, here's yet another bad news CBO report to be debated by both sides of the aisle, with the Obama supporters finding some way to spin this as good news.
Raising the U.S. federal minimum wage to $10.10, as President Barack Obama and Democrats in Congress are proposing, could result in about 500,000 jobs being lost by late 2016, the Congressional Budget Office (CBO) estimated on Tuesday.As William Dunkelberg aptly pointed out at Forbes back in December 2012, businesses cannot pay a worker more than the value the worker brings to the business. Raising the minimum denies more low skilled workers the opportunity to get a job and receive "on the job" training. The impact of raising the minimum wage in 2009 on teen employment makes it very clear that this is especially harmful for young teen workers looking for their first opportunity to have a job. Raising the cost of labor raises the incentive for employers to find ways to use less labor. Most minimum wage earners are not in poverty, yet their employment opportunities are impaired as well as those who are. This is just another one of the many poorly designed policies that are created by politicians who have little or no understanding of how business works. They promise higher legislated wages or other benefits to constituents who don't understand the true economic impact in order to gain votes.
The non-partisan CBO also said that increasing the hourly wage could reduce U.S. budget deficits by a small amount for several years, but then increase them slightly in later years.
Bottom line, most minimum-wage jobs are entry-level positions filled by workers with limited education and experience. Almost three-fifths of minimum-wage workers have no more than a high school education, and half are under the age of 25. They work for the minimum wage because they currently lack the productivity to command higher pay. Once workers gain skills, they become more productive, and most quickly earn raises or move to higher-paying jobs. Over two-thirds of workers starting out at the minimum wage earn more than that a year later.
This is not to say that workers don't deserve the pay that the marketplace for workers demands, but it is to say that they should not be paid more than the market for workers calls for.
Posted by Hyscience at February 18, 2014 4:19 PM
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- CBO: 'Obama's Minimum Wage Increase Would Cost 500,000 Jobs - Feb 18, 2014