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.
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.”
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.”