by Mitch Kokai
Senior Political Analyst, John Locke Foundation
In light of a $15 federal minimum wage creeping onto the growing laundry list of nearly every 2020 Democrats’ greatest political fantasies, the nonpartisan Congressional Budget Office put the proposal to a test and confirmed the most obvious consequence of the “Fight for $15”: millions of American jobs eliminated within a year.
Assuming by 2025 we haven’t hit a recession or any other major disruption to the longest bull market in American history, the CBO’s median estimate finds that a $15 hourly federal minimum wage would increase the wages of 17 to 27 million Americans at the cost of a median estimate of 1.3 million jobs, and an upper estimate of 3.7 million. As a result, they note, the reduction of business income would increase consumer prices, and the reduction of employment would decrease the nation’s overall capital. Aggregate real income for Americans over the poverty line would fall by some $16 billion.
Most tellingly, the number of Americans lifted out of poverty as a result of the proposal would be only 1.3 million, the same as the median estimate for those who will be thrown out of work altogether or never employed to jobs they would have gained otherwise. This may seem like a silver lining to supporters, but really it disproves the idea that a $15 federal minimum wage creates any net benefit. It simply reshuffles the problems plaguing our economy, on the whole creating more new problems than it solves.