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CBO estimate of family income effects of raising the minimum wage to $10.10.  Increases for everyone but families making more than six times the poverty threshold ($150,000 for a family of four).
Republicans are thrilled to their toes over a new Congressional Budget Office report suggesting that raising the minimum wage to $10.10 would increase income to families below the poverty threshold by a net of $5 billion, to other families by billions more, and would cost around 500,000 jobs. Why are they thrilled? Because they get to say the CBO says raising the minimum wage is a job-killer, while ignoring other key points from the CBO. For instance:
  • CBO finds that raising the minimum wage to $10.10 per hour would directly benefit 16.5 million workers. [...]
  • CBO finds that raising the minimum wage would increase income for millions of middle-class families, on net, even after accounting for its estimates of job losses. [...]
  • CBO also found that raising the minimum wage would lift 900,000 people out of poverty.
In addition to all that, Republicans are ignoring—or denying—the fact that the CBO's 0.3 percent employment decrease estimate contradicts decades of economic research finding—not predicting, but looking at cases where the minimum wage is actually raised and finding—that employment doesn't decline in any meaningful way as a result of minimum wage increases.

Here's the thing about understanding what happens when the minimum wage is raised: We don't need to guess. Twenty-one states and the District of Columbia have minimum wages higher than the federal level of $7.25, as well as some cities or counties with higher minimums, and, as we'll discuss below the fold, we already know a lot about what happens in those areas.

Economists have compared data not just at the state level but the county level, comparing restaurant industry employment between counties with higher minimum wages and those at $7.25. That's a lot of data, from different regions of the country and with different levels of minimum wage:

Map showing cross-border counties with minimum wage differentials.
The conclusion? "For cross-state contiguous counties, we find strong earnings effects and no employment effects of minimum wage increases." Fine, though. That's one study. What about others? A meta-analysis of 64 different studies with more than 1,000 employment estimates "found that the most precise estimates were heavily clustered at or near zero employment effects."

The Republican response to this CBO report therefore relies on ignoring the many positive effects it predicts for a minimum wage increase while highlighting the major point on which it departs from economic consensus. As Council of Economic Advisers Chair Jason Furman pointed out on a White House media call, this is not, like budget estimates, a case where the CBO is the main authority in the field. We know stuff about this, because it's been widely studied, and there are other authoritative voices.

No doubt we'll hear a lot about this report because there will be a lot of politicians seeking to exploit its gloomy prediction while ignoring the positive ones. But the American people have withstood decades of Republican fearmongering over what will happen if the minimum wage is raised, and raising the minimum wage is still very popular.

Originally posted to Daily Kos Labor on Tue Feb 18, 2014 at 01:22 PM PST.

Also republished by Daily Kos.

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