Some economists took issue with the “misleading” report, released on Monday by the Congressional Budget Office.
A $15 federal minimum wage would lift nearly a million Americans out of poverty but cost 1.4 million jobs, according to a report released Monday by the Congressional Budget Office (CBO). The CBO’s analysis also found that if the Raise the Wage Act of 2021 were enacted, the cumulative budget deficit is estimated to increase by $54 billion from 2021 to 2031. Some economists pushed back Monday on the analysis that the Raise the Wage Act would be detrimental to employment and the federal budget. Among them was Michael Reich, who teaches economics at the University of California at Berkeley and co-chairs the Center on Wage and Employment Dynamics at the Institute for Research on Labor and Employment. “A phased increase would likely be absorbed without detectable effects on employment,” Reich told reporters on Monday. He said a $15 federal minimum wage would have a positive effect on the federal budget, rather than widen the deficit. According to a report released by the Economic Policy Institute (EPI) last week, implementing a $15 wage by 2025 would increase tax revenues while “government expenditures on major public assistance programs would fall by between $13.4 billion and $31.0 billion annually.” Reich said that once the $15 wage is fully implemented in four years, the Raise the Wage Act would have an overall positive effect of $65.4 billion on the federal budget. He provided two examples of how the Act would translate into money-saving behaviors. In one, workers would purchase food with their paychecks rather than food stamps, leaving more savings for national nutrition programs. The same EPI report found the Supplemental Nutrition Assistance Program (SNAP), among other government payouts, would decrease by between $5.2 billion and $10.3 billion annually. In another case, older workers would delay retirement and continue collecting high paychecks.
