Yesterday, the CBO released a report highlighting the clear economic benefits of raising the minimum wage to $10.10 per hour including lifting nearly one million Americans out of poverty, giving a pay raise to almost 25 million people and helping build an economy that works for everyone. But most of the attention has been focused on what the report concludes might be the impact of increasing the minimum wage on employment. In fact, its conclusions contradict the consensus among hundreds of America’s top economists, who predict that a wage hike would actually stimulate the economy, raise demand and job growth, and provide help in job creation.
Joseph Stiglitz, Nobel Prize winning economist and professor at Columbia University
“The CBO analysis underestimated the benefits and overestimated the costs in several respects” said Stiglitz said on a conference call with reporters on Tuesday.
Michael Reich, Economics professor and director of the Institute for Research on Labor and Employment at the University of California Berkeley
The method used by the CBO to estimate job loss is never clearly explained. According to the Appendix, the figure appears to come almost entirely from its “synthesis” of the research literature…It thus appears to have counted the studies equally without making any adjustments for their quality. This is especially surprising since the economic research literature has been divided on how to measure employment effects. [
Jared Bernstein, senior fellow at the Center on Budget and Policy Priorities in Washington and a former chief economist to Vice President Joseph R. Biden Jr.
To derive the job-loss effects, the report does not do any original research. It just uses estimates from a wide range of studies on the impact of past minimum-wage increases… It is important to recognize that there is a very wide range of estimates from which the budget agency can choose…This wide range does not imply that the budget office made a mistake, though it looks to me as if it applied a higher job-loss estimate than is the current consensus among economists who’ve closely studied the issue.
From The New York Times:
Several top labor economists said on Tuesday that the budget office was overstating the proposal’s effect on the job market. Lawrence Katz of Harvard, for instance, said that the budget office had used “a lot of off-the-shelf estimates” of the jobs effect, and that if it had emphasized findings from higher-quality studies, it would have found a smaller or negligible impact on total employment.
And The New Republic:
This estimate involves no original research by the CBO. What they did is a survey of the various economic research that already exist, picking an impact that the office’s staffers thought was appropriate.
It’s time to put more money in the pockets of millions consumers, to strengthen the economic security of working families, and close the opportunity gap for those struggling most to make ends meet. It’s time to give America a raise.