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Conservatives scramble to spin new economic analysis that shows clear benefits of minimum wage increase

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Ever since President Franklin Delano Roosevelt signed into law the United States’ first national minimum wage in 1938, there have been Republicans and fiscal conservatives insisting that minimum wages are a job killer. FDR, however, told Republicans to relax — a mandatory 25 cents per hour wouldn’t destroy the U.S. economy or hamper the success of his New Deal — and 81 years later, a Congressional Budget Office (CBO) study is showing that increasing the national minimum wage to $15 per hour would be economically beneficial. Naturally, fiscal conservatives are scrambling to spin the study to their liking.

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The benefits, according to the CBO: Americans living belong the poverty line would see a 5.3% earnings increase, and wages would rise for up to 27.3 million workers. Workers already making more than $15 per hour would likely see their wages rise as well.

That’s the positive part of the CBO’s cost/benefit analysis, which also found that under a $15 minimum wage, Americans would be paying about 0.3% more for goods and services. Business owners would see a higher overhead if they started paying employees more.

But the American Prospect’s David Dayen explains that fiscal conservatives, responding to the study, are spinning it in terms of a “cost-cost” analysis — in other words, they’re highlighting the negatives while glossing over the positives.

For example, a group calling itself the Job Creators Network claims that a $15-per-hour minimum wage, according to the CBO, would bring staggering job losses. Dayen explains, “Though 21 people will get a wage boost for every one that would allegedly lose a job under the CBO’s analysis, the only impacts mentioned are the latter.”

Dayen stresses that although the CBO analysis of a $15 minimum wage was more positive than negative, other analysis and research on the subject has been even more favorable to such an increase. A study by economists at the University of California at Berkeley found no “adverse effects on employment, weekly hours or annual weeks worked.”

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The American Prospect editor explains, “This is what you might call a wealth transfer: well-off people would pay a little bit more for goods, and businesses would lose a little bit more in profits, to finance a wage increase for a substantial segment of the population. Inequality would be reduced by a significant factor. The cost-benefit analysis clearly comes out on the side of benefits.”


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