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Economy & Business

Federal $15 Minimum Wage Would Eliminate 1.3 Million Jobs, CBO Says

Job seekers line up at an “Amazon Jobs Day” fair in Fall River, Mass., August 2, 2017. (Brian Snyder/Reuters)

Implementing a $15 federal minimum wage would result in the elimination of some 1.3 million jobs, according to a report released by the Congressional Budget Office Monday.

“About 1.3 million workers who would otherwise be employed would be jobless in an average week in 2025,” the report reads. “That decrease would account for 0.8 percent of all workers and 7 percent of directly affected workers who would otherwise earn less than $15 per hour.”

The report scores legislation introduced by Representative Bobby Scott (D., Va.) that would gradually phase in a $15 minimum wage over five years and would eliminate the minimum-wage exemption that currently applies to workers who receive tips.

“The CBO’s report leaves no doubt that the Raise the Wage Act will be good for workers and their families,” Scott said in a statement Monday.

Under the bill, some 17 million people would see their wages increase and 1.3 million people would be raised out of poverty, but real total income would decrease by $9 billion, with most of the losses accruing to business owners and consumers who would see prices increase. The House is expected to pass the legislation later this month despite opposition from moderates within the Democratic caucus. The Republican-controlled Senate, however, is not expected to take it up.

The legislative push comes after a number of large corporations, including Amazon, Walmart, and Jet Blue, announced plans to voluntarily increase their minimum wages to $15 in the coming years.

A number of Democratically controlled cities, including Seattle and San Francisco, have implemented plans to phase in $15 minimum wages. A 2016 study by the Harvard Business School found that restaurant closures increased markedly when San Francisco began to increase its minimum wage.

The study, released in April 2017, found “A $1 increase in the minimum leads to a 14% increase in the likelihood of exit for a 3.5-star restaurant.”

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