Morning Action: Minimum Wage Hike Would Eliminate 500,000 Jobs
MINIMUM WAGE. The Congressional Budget Office’s analysis of how a minimum wage hike would effect jobs and poverty is a big story this week (sub. req’d):
The Congressional Budget Office’s new report on raising the federal minimum wage describes stark economic choices for Congress, with strong benefits going to low-income workers who would be lifted out of poverty but potentially significant costs to the jobs market.
The trade-offs were evident in the sharply different responses from Republicans and Democrats: Jason Furman, the top White House economic adviser, said the CBO provided strong justification for a plan to lift up those in poverty, but he discounted the jobs impact as out of step with other reports. Top Republicans said the report showed that boosting the minimum wage would kill jobs.
The Heritage Foundation explains:
But the agency came to the same conclusion Heritage did: a $10.10 minimum wage has no historical precedent and would jettison hundreds of thousands of jobs.
The Congressional Budget Office’s new report concurs. The CBO finds the minimum wage has never stood much above $8 an hour—if analysts use the best available measure of inflation (as CBO and Heritage did). The CBO also found the effects of hiring cutbacks overwhelm any “stimulus” effects from the minimum wage. The agency concluded a $10.10 minimum wage would cost 500,000 jobs—with less than a fifth of those getting higher pay coming from families below the poverty level. If anything, Heritage’s estimates were conservative.
The Congressional Budget Office confirms the President proposes an unprecedented increase in the minimum wage that will cost hundreds of thousands of jobs. This seems highly questionable, especially with the economy struggling with high unemployment.
OBAMACARE. Health and Human Services Secretary Kathleen Sebelius actually thinks that Obamacare has not resulted in any job loss — or at least that’s how she’s spinning it. But many economists, including the Heritage Foundation’s James Sherk, disagree:
“There is absolutely no evidence, and every economist will tell you this, that there is any job loss related to the Affordable Care Act,” she said on Monday.
In the land of the waking, Heritage’s James Sherk—an economist who doesn’t fall under “every economist,” according to Sebelius—plainly states that “The Affordable Care Act has discouraged companies from creating jobs and workers from accepting them.”
There are mountains of evidence—from businesses’ reports to the Federal Reserve to this list compiled by Investor’s Business Daily. And the stories keep coming: Just yesterday, an industry trade group estimated that Obamacare’s medical device tax has killed 33,000 jobs.
PENSIONS. CQ reports undoing cuts to military pension increases proves the durability of mandatory spending (sub. req’d):
Leaders on both sides of the aisle cast a budget agreement reached by the House and Senate budget chairmen as a small but important step in tackling the country’s fiscal problems, one that took the so-called grand bargain off the table but at least made slight progress in addressing spending concerns in both parties.
But last week’s vote on a bill (S 25) to repeal cuts in the budget deal (PL 113-67) to military pensions for current veterans and military servicemembers showed that even small deals have pitfalls and may be even more difficult than larger compromises. That, budget watchers say, should cause lawmakers to reconsider whether modest agreements really are preferable to the elusive grand bargain.
The deal notably included a $6.2 billion cut in cost-of-living increases to military pensions for veterans up to age 62, a small but significant step toward curbing the growth of autopilot spending programs.
It didn’t last. Last week, just before leaving for their Presidents Day recess, the House and the Senate rapidly cleared legislation undoing the cuts in military pension increases after veterans groups marshaled forces against the plan. The House vote was 326-90, and it was even more lopsided in the Senate, at 95-3. President Barack Obama signed the legislation over the weekend.