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Biden minimum wage hike plan would have mixed results: study


(FILES) In this file photo US President Joe Biden prepares to sign executive orders on affordable healthcare in the Oval Office of the White House in Washington, DC, on January 28, 2021. – A group of 10 Republican senators have written President Joe Biden to propose an alternative to his massive Covid-19 relief plan, arguing that their approach could garner the bipartisan support he has said he seeks.<br />Senator Susan Collins, a moderate Republican from Maine, said on Twitter that she had joined the group, which asked the president in a letter on January 29, 2021 for a meeting to discuss their plan. (Photo by MANDEL NGAN / AFP)

US President Joe Biden’s proposed minimum wage increase would cut 1.4 million jobs but lift 900,000 people out of poverty, according to a study released Monday.

The proposal also would boost wages for another 27 million workers, according to a report by the Congressional Budget Office, that showed the overall increase in earnings outweighs those lost through the projected job cuts.

The CBO report paints a mixed picture of the benefits of the plan to gradually lift the wage floor in the United States to $15 an hour by 2025 from the current $7.25.


Biden has championed the increase as part of his economic plan, saying the benefits outweigh the costs.

The minimum hourly wage was last raised in 2009 following a staged increase included in a 2007 law, although some states have mandated higher wages.

Supporters have characterized the legislation as a key element in addressing widening US income inequality, especially in non-white communities that have suffered disproportionately from the Covid-19 virus.

But critics have warned the increase could harm small businesses.

Biden acknowledged in a CBS interview last week that the $15 minimum wage probably would not be included in the $1.9 trillion economic relief package, but he said he remained committed to the issue.


The CBO report predicted that higher wages would lead employers to pass on the some of the increased costs to consumers, resulting in lower consumption and ultimately leading to job losses. The study also noted that some companies would shift to automation.

But the report also said boosting wages for low-income families would lift consumption among low income workers, which would “reduce the drop in employment for several years” after the wage hike takes effect.

The study estimates net pay would jump $333 billion over a decade through 2031, with the $509 billion in higher wages, more than offsetting the $175 billion in lost wages due expected job cuts.

There is broad debate among economists and little consensus on the impact of minimum wage hikes.

The Economic Policy Institute, a progressive think tank, said Monday the CBO analysis is “just wrong” and pointed to other reports that have shown no negative hit on employment.


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