The nonpartisan Congressional Budget Office (CBO) released a new report on the “Raise the Wage Act” and found that a nationwide $15 minimum wage would be even more devastating to the American people than previously envisioned.
Democrats like Nancy Pelosi and Bernie Sanders say that a $15 minimum wage will help lower unemployment and bring Americans above the poverty line. However, the CBO found that this current plan does the exact opposite by kicking Americans out of work. By 2025, when the minimum wage reaches $15 per hour, the expected number of Americans who will be unemployed due to increased labor costs will be 1.4 million.
The CBO elaborated further that of the 1.4 million Americans who will be unemployed, “young, [and] less educated people would account for a disproportionate share of those reductions in employment.” This would leave the most vulnerable American workers in the dust if the $15 wage is implemented. A recent literature review from the National Bureau of Economic Research analyzed minimum wage studies and also found that the preponderance of evidence suggests that a higher minimum wage has a negative effect on low-skill employment.
The CBO also found that the Raise the Wage Act would increase the cost of unemployment. In addition to adding $54 Billion to the federal deficit, “Spending for unemployment compensation would increase under the bill because more workers would be unemployed.” Over 50 million Americans have applied for unemployment since the pandemic began. The last thing we need to do is add more strain to the system.
The Raise the Wage Act would also harm American consumers. The CBO found that “The largest price increases, relative to the average increase, would be for goods or services whose production required a larger-than-average share of low-wage work, such as food prepared in restaurants.” This will force businesses like restaurants to raise prices, inevitably driving consumers elsewhere and leading to a further loss of revenue and layoffs. Businesses that the pandemic has shuttered may not decide to reopen at all in the face of a $15 minimum wage.
A $15 minimum wage has broad opposition. ATR has released a coalition letter with over 60 groups, activists, and legislators in opposition to a nationwide $15 minimum wage that you can view here.
ATR opposes raising the minimum wage to $15 and continues to urge members of Congress to reject the Raise the Wage Act in order to protect American businesses and workers.