It’s hard to argue that the focus of the first three weeks of the Biden Administration has been anything but going after American workers are eliminating job opportunities. That’s what he has done with his executive orders cancelling the construction of the Keystone Pipeline and banning energy leasing and permitting on federal land, which will destroy thousands of jobs and hurt families at a time when we should be focusing on economic recovery efforts and job creation.
Now, the CBO indicates that his latest policy push will do the same thing. In a report issued yesterday, the non-partisan agency found that legislation that would artificially increase the minimum wage to $15/hour would eliminate jobs for 1.4 million Americans, while increasing the deficit by $54 billion.
This is an important reality check for Democrats.
While they claim they want to help the country recover from the challenges we have seen because of the pandemic, it’s clear that this policy would only cause economic pain. Cutting off a source of income for 1.4 million Americans would be devastating for them, and they’d have fewer opportunities to find a new job after that. We all want to see wages rise, but this report makes clear that government intervention would actually offer more consequences than benefits since it would result in lower and middle-income Americans losing out entirely on sources of revenue that they need.
Editorial boards across the country were quick to note the significance of this report and why it makes clear that Democrats’ legislation is nothing more than bad policy:
- The Wall Street Journal (Editorial): “Reality Check for a $15 Minimum Wage”
- President Biden says his priority is creating new jobs and he wants “to grow the economy for all Americans.” But look at how the Congressional Budget Office sizes up his proposal for a $15 federal minimum wage. Phasing in this mandatory wage floor by 2025, according to the CBO’s new average estimate, would result in a loss of 1.4 million jobs.
- Low-wage employees lucky enough to keep their jobs would get a raise. CBO says 17 million workers would be “directly affected” by the $15 minimum, and poverty “would be reduced by 0.9 million.” This is not a free lunch, no matter how often Mr. Biden and Bernie Sanders say so. Those gains would come at a high cost for the young and unskilled who will have a harder time grabbing the first rung of the economic ladder.
- Even those figures are a guess, since setting the minimum wage at a high of $15 would essentially put the country through an economic experiment. This would mean imposing the urban labor costs of San Francisco and Manhattan on every out-of-the-way gas station in rural America. The U.S. economy is made up of local and regional labor markets with prevailing wage rates that depend on varying standards of living, the kinds of employers, and the availability and skill of the workforce. Some 20 states have a minimum wage no higher than the current national minimum of $7.25.
- The Washington Examiner (Editorial): “CBO offers minimum wage reality check”
- As President Biden and Democrats kept pushing the absurd idea of increasing the minimum wage during a pandemic that has already adversely affected the service industry, the Congressional Budget Office on Monday delivered a needed reality check. Democrats led by Biden would more than double the federal minimum wage from its current $7.25 per hour to $15 per hour between now and 2025.
- Conceptually, allowing politicians to determine the floor at which individuals must be paid, rather than the fair value determined by market forces, is a bad idea. But at a time when so many people are already out of work, it is a catastrophe. Such a dramatic increase would lead to massive job losses and higher costs to consumers. The CBO has provided some sobering estimates to support this view. Were Democrats to succeed in passing their minimum wage hike, which would likely require an extraordinary expansion of the Senate budget reconciliation power, it would reduce employment by an average estimate of 1.4 million workers, or as high as 2.7 million under some scenarios.
- Doubling the federal minimum wage to $15 an hour was always a bad idea. The CBO has now helped quantify how destructive it would be.
- The New York Post (Editorial): “Putting ‘heroes’ out of work with a mandatory wage hike”
- Meanwhile, a new report from the nonpartisan Congressional Budget Office projects that President Biden’s plan to implement a $15 federal minimum wage would kill 1.4 million jobs and almost double the federal deficit.
- Consider just grocery stores in the 21 states covered by the current federal minimum wage of $7.25: They’re looking at hourly pay doubling under the Raise the Wage Act. Kroger, for one, is already looking to replace too-costly workers with technology: It’s opening an all-self-checkout pilot store in Dallas later this month, employing cashiers only as backup.
- Instead of helping low-wage workers, an exorbitant minimum wage will only keep them from working at all — robbing them of the chance to earn promotions to well-paying jobs. It’s a mandate for never earning a living wage at all.