The Clear Benefits of a Higher Wage

Republicans sputtered with outrage when the Congressional Budget Office said that immigration reform would lower the deficit, strengthen Social Security and speed up economic growth. They called for the office to be abolished when it dared to point out that tax cuts raise the deficit or when it highlighted the benefits of health care reform. But now that the budget office has predicted (and exaggerated) the possibility that an increase in the minimum wage might result in a loss of jobs, Republicans think it’s gospel.

“This report confirms what we’ve long known,” said a spokesman for the House speaker, John Boehner. “While helping some, mandating higher wages has real costs, including fewer people working.”

What Republicans fail to mention is that Tuesday’s report from the budget office, a federal nonpartisan agency, was almost entirely positive about the benefits of raising the minimum wage to $10.10 by 2016, as President Obama and Congressional Democrats have proposed.

More than 16 million low-wage workers, now making as little as $7.25 an hour, would directly benefit from the increase, the report said. Another eight million workers making slightly more than the minimum would probably also get raises, because of the upward “ripple effect” of an increase. That would add $31 billion to the paychecks of families ranging from poverty level to the middle class, significantly increasing their spending power and raising the nation’s economic output and overall income.

In fact, the report said, 900,000 people would be lifted from poverty with a wage increase. The income of those below the poverty line would increase by a total of $5 billion, or 3 percent, at no cost to the federal budget.

The vast majority of those getting raises would not be teenagers with part-time jobs. Nearly 90 percent of them are adults 20 and older, and 53 percent of them work full time. Women represent 56 percent of them.

But the report said there could be a cost to the wage increase, and most of the headlines have focused on the possible loss of 500,000 jobs, or about 0.3 percent of total employment. That bears further scrutiny, because, unlike the benefits, the employment estimates have been disputed by a wide variety of nonpartisan economic studies.

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