The new Federal Reserve chairman, Janet Yellen, seemed to offer some support for the CBO’s recent conclusion that increasing the minimum wage to $10.10 an hour, as President Obama and Senate Democrats propose, would cost a significant number of jobs. The CBO projected that the proposal would mean 500,000 fewer jobs by the end of 2016, a conclusion the White House took issue with.
Yellen said the CBO “is as qualified as anyone to evaluate the literature” about the employment effects of the minimum wage (some of which argues there would be little to no jobs losses, and some of which suggests there would be significant job losses), and that she “wouldn’t want to argue with their assessment.” (As I noted a few weeks ago regarding her discussion of inequality, obviously there are political and practical reasons why Yellen might not want to weigh in on an economic debate in front of Congress, but here as with inequality, she’s certainly not lending any support to the White House’s economic claims.)
“There are a range of studies, and they cited them,” she said, adding that the CBO’s ”good at this kind of evaluation.”
When the CBO’s report was released, White House economic adviser argued the following: “CBO’s estimates of the impact of raising the minimum wage on employment does not reflect the current consensus view of economists. The bulk of academic studies, have concluded that the effects on employment of minimum wage increases in the range now under consideration are likely to be small to nonexistent. CBO also agrees that the employment effect could be essentially zero, but their central estimates are not reflective of a consensus of the economics profession.”
The Fed chairman President Obama just appointed, who if anything leans a little to the left side of the economic profession, doesn’t necessarily seem to agree.