CBO Report May Slow Efforts to Boost Minimum Wage

Author: Michael Cardman, XpertHR Legal Editor

February 19, 2014

A new report from the Congressional Budget Office (CBO) concludes that raising the federal minimum wage to $10.10 per hour could reduce employment by 500,000 jobs.

The report splashes cold water on campaigns to raise the minimum wage at both the federal and state levels. Although many polls have shown a majority of voters support raising the minimum wage, a Gallup poll released Feb. 17 shows that unemployment is voters' top concern.

Because the CBO has a reputation as a nonpartisan "referee," its reports can exert a strong influence on the prospects of legislation under consideration in Congress. For example, CBO reports have affected the debate on the Affordable Care Act and the debt ceiling. Mainstream media outlets often publicize CBO reports as well, which can shape public perception of proposals like President Obama's plan to increase the minimum wage.

The prospects for a smaller increase in the minimum wage could prove more promising. The CBO report found that raising the minimum wage to $9 instead of $10.10 would result in a loss of 100,000 jobs.

Nevertheless, the White House and its allies, including House Minority Leader Nancy Pelosi and AFL-CIO President Richard Trumka, continued to express support for a $10.10 minimum wage.

Asked if he was concerned that the CBO report would make it harder to pass an increase, White House Council of Economic Advisers Chairman Jason Furman responded that the majority of workers discussed in the report would benefit from an increased minimum wage.

"[I] think that explains why this has overall been a very popular issue for the public," he said. "And I don't think this report changes those facts or will change the public perception."