The CBO’s Minimum Wage Analysis Should Surprise Precisely No One

The Congressional Budget Office has come out with an analysis of what might happen if the minimum wage is increased to $10.10. That analysis consists of the following major points:

• A minimum wage increase “would significantly boost income for about 16.5 million workers, raising their income by $31 billion and potentially pulling nearly 1 million people out of poverty.”
• A minimum wage increase would also “cost 500,000 jobs in 2016.”

No one’s jaw should drop as a consequence of this finding. There will be workers who will be able to keep their jobs, and who will be able to make more money with a minimum wage increase. There will also be workers who will lose their jobs because labor will be more expensive as a consequence of a minimum wage increase.

The question, of course, is whether the benefits of a minimum wage increase outweigh the costs. In general, my answer to that question has been “no,” as the Earned Income Tax Credit has been shown to do a lot more to help the working poor than has the minimum wage. Perhaps if the employment market were robust enough, I might be willing to look a little more favorably upon the minimum wage, though losing 500,000 jobs seems to be too high a cost to pay. But with the employment market as weak as it is now, there isn’t a sand castle’s chance in an earthquake that I will be willing to back a minimum wage increase. And no responsible policymaker/pundit/wonk should back such an increase; weighing down the employment market with half a million more lost jobs is the height of irresponsibility.