Today's Congressional Budget Office report on the raising the minimum wage is a bit of a Rorschach test. Whether or not you support a hike, it contains new ammo for your old argument.
On the one hand, the government's chief number-crunchers conclude it's probably a job killer. Increasing the minimum to $10.10 an hour, as Democrats have proposed, would eliminate about 500,000 jobs.
On the other hand, they also find it would pull 900,000 people out of poverty, and put around $19 billion into the pockets of low- and middle-income families. About 16.5 million workers would get a pay bump. Wealthier families see their real income drop a bit, as business profits slip and prices rise somewhat.
Even if you don't agree with every technical aspect of how the CBO has conducted its analysis, it is certainly a reasonable take on a subject where the economics are far from settled. And to me, the numbers present a strong case for raising the wage (a case that, yes, I've made before). Accounting for moderate job losses (which some research suggests might not even materialize), we're talking a policy that collectively enriches working families. Some teens and less educated workers will have more difficulty finding a job, but more will receive a raise. When you weigh the potential trade-offs, it seems like a net plus for the economy.
At the same time, the report also demonstrates the limits of the minimum wage as a policy tool for curing poverty or bolstering the middle class. There are currently about 45 million people living in poverty—the CBO's estimate suggests the wage hike being debated in Washington would only reduce that number by 2 percent. Among families under the poverty line, average incomes wouldn't increase any more than 3 percent.
For liberals looking for ways to combat inequality and poverty, raising the minimum wage would be a good start, but no more.
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