Would you be happy if 500,000 Americans lost their jobs?
I assume the answer is an overwhelming “no.”
Why would I ask such a ridiculous question? With the exception of personal grudges, I don’t think any American would want their fellow American to lose his or her job.
Let’s try another question…
Would you be happy if 900,000 Americans were lifted out of poverty?
I assume this answer is an overwhelming “yes.”
What if I told you that one would be the direct result of the other?
In other words, we could potentially lift 900,000 Americans out of poverty at the cost of 500,000 other Americans’ jobs.
According to several sources, more than two thirds of Americans prefer this situation. That is, more than two thirds of Americans favor an increase in the minimum wage.
The Effects of a Minimum-Wage Increase on Employment and Family Income
Most articles about the minimum wage are highly political and completely biased. For example, a “right-wing” think tank may highlight the negative effects of an increased minimum wage while a left-leaning institution will showcase the positive impact. For further example, I have been extremely critical of a minimum wage increase even while attempting to remain unbiased. Click here, here, or here to read my past articles on the minimum wage. The point is…you’ll have a difficult time finding an article that highlights both the positive and negative effects of increasing the minimum wage…until now.
On February 18th, the non-partisan Congressional Budget Office (CBO) published The Effects of a Minimum-Wage Increase on Employment and Family Income. From what I’ve read, it’s the most
boring unbiased analysis of the highly controversial topic. Very generally speaking, it found that increasing the minimum wage would likely have positive impacts as well as negative consequences. Mind-blowing, right?
Specifically, here are some interesting (possible) effects of increasing the minimum wage:
- About 16.5 million low-wage workers would see increased earnings. (positive)
- The increased earnings for low-wage workers resulting from the higher minimum wage would total $31 billion. (positive)
- Those earnings, however, would not go only to low-income families, because many low-wage workers are not members of low-income families. Just 19 percent of the $31 billion would accrue to families with earnings below the poverty threshold, whereas 29 percent would accrue to families earning more than three times the poverty threshold. (interesting)
- Once increases and decreases in income for all workers is taken into account, overall real income would rise by $2 billion. (positive)
- 900,000 people would rise above the poverty level. (positive)
- By increasing the minimum wage to $10.10, employment would be reduced by about 500,000 workers. By increasing the minimum wage to $9.00, employment would be reduced by 100,000 workers. (negative)
These last 2 bullet points beg the question:
Should we sacrifice the jobs of 500,000 Americans to lift 900,000 Americans out of poverty?
Should we take the earnings and job responsibilities of 500,000 Americans and sprinkle them around so that 16.5 million Americans can be better off?