Minimum wage hike’s inconvenient truth

Mar 10th, 2014

Minimum wage hike’s inconvenient truth

Report confirms raising it could cost jobs


There has been a lot of discussion re­cently at all levels – federally, statewide and locally – about the minimum wage. Questions that arise due to this discus­sion include: Should it be raised? If so, by how much? What is it intended purpose? What impacts will we experience if it is raised?

A new report was released by the Congressional Budget Office (CBO) in February indicates increasing the minimum wage would have two principal effects on low-wage workers. Most of them would receive higher pay that would increase their family’s income. Some of those families would see their income rise above the fed­eral poverty threshold. Some jobs for low­wage workers, however, would probably be eliminated, the income of most workers who became jobless would fall substantially and the share of low-wage workers who were employed would probably fall slightly.

What is the CBO? According to its
website, since its founding in 1974, CBO has produced independent analyses of bud­getary and economic issues to support the congressional budget process. The agency is strictly nonpartisan and conducts objec­tive, impartial analysis, which is evident in each of the dozens of reports and hundreds of cost estimates its economists and policy analysts produce each year. All CBO em­ployees are appointed solely on the basis of professional competence, without regard to political affiliation. CBO does not make policy recommendations, and each report and cost estimate discloses the agency’s as­sumptions and methodologies.

Reviewing the option to increase minimum wage to $10.10 per hour – a figure consistent with a recent edict from President Obama for new government contracts – phased in over a two and one­half year period the $10.10 option would reduce total employment by about 500,000 workers, or 0.3 percent.


At the same time, real income would increase, on net, by $5 billion for families whose income will be below the poverty threshold under current law, boosting their average family income by about 3 percent and moving about 900,000 people, on net, above the poverty threshold.

So, to net it out, approximately two out of three people currently being paid at minimum wage would see an increase in
income that would raise them above the poverty threshold and the third person would lose his or her job. This information is so new that nobody has developed an impact study on what that job loss would mean to our economy, but suffice to say it cannot be good.

Locally, we have heard much the same thing: jobs will be eliminated and prices will also increase. The price increases – at restaurants, bookstores, etc. – impact everyone, especially those on fixed incomes.

Preparing for future discussion on this topic, the question we have to ask ourselves: Would that be that worth the potential loss of 500,000 jobs? Or perhaps on a more personal level, if you were voting on this issue, would you be willing to bet that you would be one of the two people getting an increase with the chance that you might be the one losing your job?

The Greater Las Cruces Chamber of Commerce’s thought is to foster an environ­ment that allows companies to prosper and they can then afford to give their employees who are doing a good job more money.


Locally, we have heard much the same thing (about the wage increase): jobs will be eliminated and prices will also increase.