Personal Liberty Digest™ will be upgraded this weekend to reflect a dynamic new look and mobile-friendly viewing to enhance your experience! Plus, we'll be providing even more of the compelling content you've come to expect, delivered in a whole new way!

  Comments Subscribe to Personal Liberty News Feed Subscribe to Personal Liberty
 

CBO Report Examines Job Loss Along With Potential Benefits Of Minimum Wage Hike

February 19, 2014 by  

CBO Report Examines Job Loss Along With Potential Benefits Of Minimum Wage Hike
PHOTOS.COM

A Congressional Budget Office report out Tuesday indicates that President Barack Obama’s plan to raise the Federal minimum wage to $10.10 an hour by 2016 could cost the economy 500,000 jobs.

The nonpartisan budget watchdog said that the minimum wage hike would boost the income of about 16.5 million workers throughout the Nation, but not without some economic drawbacks.

“This report confirms what we’ve long known: while helping some, mandating higher wages has real costs, including fewer people working. With unemployment Americans’ top concern, our focus should be creating — not destroying — jobs for those who need them most,” a spokesman for House Speaker John Boehner (R-Ohio) said of the report.

CBO explained the employment consequences thusly:

According to conventional economic analysis, increasing the minimum wage reduces employment in two ways. First, higher wages increase the cost to employers of producing goods and services. The employers pass some of those increased costs on to consumers in the form of higher prices, and those higher prices, in turn, lead the consumers to purchase fewer of the goods and services. The employers consequently produce fewer goods and services, so they hire fewer workers. That is known as a scale effect, and it reduces employment among both low-wage workers and higher-wage workers.

Second, a minimum-wage increase raises the cost of low-wage workers relative to other inputs that employers use to produce goods and services, such as machines, technology, and more productive higher-wage workers. Some employers respond by reducing their use of low-wage workers and shifting toward those other inputs. That is known as a substitution effect, and it reduces employment among low-wage workers but increases it among higher-wage workers.

While the CBO estimates that the majority of Americans who are currently in low-wage jobs would benefit from the hike, those projected to be most negatively affected include the Nation’s most vulnerable low-skilled workers. That would create a small but noticeable jump in the number of Americans who rely completely on government aid to survive, based on the report.

At the same time, low-wage Americans who currently rely on some Federal benefits to get by and whose employers can justify keeping them on the payroll at a higher cost, could be able to completely remove themselves from the government dole.

Sam Rolley

Staff writer Sam Rolley began a career in journalism working for a small town newspaper while seeking a B.A. in English. After learning about many of the biases present in most modern newsrooms, Rolley became determined to find a position in journalism that would allow him to combat the unsavory image that the news industry has gained. He is dedicated to seeking the truth and exposing the lies disseminated by the mainstream media at the behest of their corporate masters, special interest groups and information gatekeepers.

Facebook Conversations

Join the Discussion:
View Comments to “CBO Report Examines Job Loss Along With Potential Benefits Of Minimum Wage Hike”

Comment Policy: We encourage an open discussion with a wide range of viewpoints, even extreme ones, but we will not tolerate racism, profanity or slanderous comments toward the author(s) or comment participants. Make your case passionately, but civilly. Please don't stoop to name calling. We use filters for spam protection. If your comment does not appear, it is likely because it violates the above policy or contains links or language typical of spam. We reserve the right to remove comments at our discretion.

Is there news related to personal liberty happening in your area? Contact us at newstips@personalliberty.com

Bottom
close[X]

Sign Up For Personal Liberty Digest™!

PL Badge

Welcome to PersonalLiberty.com,
America's #1 Source for Libertarian News!

To join our group of freedom-loving individuals and to get alerts as well as late-breaking conservative news from Personal Liberty Digest™...

Privacy PolicyYou can opt out at any time. We protect your information like a mother hen. We will not sell or rent your email address to anyone for any reason.