CBO estimates minimum wage hike to cost 500,000 jobs

The nonpartisan Congressional Budget Office, or CBO, released an estimate Tuesday afternoon saying that the Obama administration’s proposed minimum wage hike would result in 500,000 fewer Americans being employed. The proposal, supported by Democrats in Washington, D.C., and Springfield alike, is to hike the minimum wage to $10.10 per hour. Low-wage workers would see a...

The nonpartisan Congressional Budget Office, or CBO, released an estimate Tuesday afternoon saying that the Obama administration’s proposed minimum wage hike would result in 500,000 fewer Americans being employed. The proposal, supported by Democrats in Washington, D.C., and Springfield alike, is to hike the minimum wage to $10.10 per hour.

Low-wage workers would see a boost of $31 billion in income. However, only one-fifth of this sum, or about $6 billion, would make its way to low-income families. That’s because many low-income workers are a part of high- and medium-income families.

In short, some low-income families would gain $6 billion in additional income at the expense of 500,000 jobs for workers from other families. This policy makes the short-sighted trade of an additional $1,200 in pay for low-income families per job lost by other workers. The short-term gain in income pales in comparison to a lost opportunity to gain work experience and skills.

This trade is unfair to those who would be involuntarily put out of work, most likely the young and unskilled. Illinois has rushed ahead of the rest of the U.S. on hurting its young workers by enacting a higher minimum wage than the federal level. The CBO report pinpoints a high minimum wage as a cause for employment losses among young and unskilled workers. A previous Illinois Policy Institute study revealed that a similar wage hike in Illinois would cost the state 10,500 jobs.

The Illinois experiment shows that ignoring economic sense produces unforeseen consequences and dependence on government. In fact, food stamp enrollment in Illinois is up to the tune of 100 new food stamps recipients per job created in the last decade.

It’s time for Illinois to give up on being the lab rat of failed economic policies and put to rest the agitation for a minimum wage hike.