New CBO report: Biden’s minimum wage hike would cost 1.4 million jobs

The first principle of being a competent human is to not destroy yourself with your own bad decisions.

Daily Wire reports:

In a report released Monday, the Congressional Budget Office said that hiking the minimum wage to $15 might reduce poverty, but at the cost of 1.4 million jobs and by adding billions to the federal deficit.

President Joe Biden and Sen. Bernie Sanders (I-VT) have both pledged to back legislation raising the federal minimum wage to $15 — what both the president and the socialist Senator call a “living wage.”

[…]The plan, CNN notes, would help some people, increasing “worker pay by $333 billion, giving a boost to some 17 million workers whose wages would otherwise be below $15, as well as many of the 10 million workers whose wages would otherwise be slightly above that level.”

People will lose their jobs:

The jump would “cut employment by 1.4 million workers and increase the federal deficit by $54 billion over a decade,” the outlet notes. And while federal spending on things like supplemental food aid programs might decrease, “spending on Medicaid and unemployment benefits would increase because of higher enrollment by those who lose their jobs.” Prices on goods and services would also rise, The Wall Street Journal adds.

Prices of goods and services would go up:

“Higher wages would increase the cost of producing goods and services, and businesses would pass some of those increased costs on to consumers in the form of higher prices, resulting in reduced demand, the CBO said,” per the WSJ. “From 2021 to 2031, the plan would increase payments to workers by a net $333 billion, after accounting for wage increases and job losses, the study found. That would allow low-income workers to spend more but would increase labor costs for businesses and raise prices, especially at restaurants. The loss of jobs would cause a modest negative overall impact on economic growth.”

We’ve already seen tens of thousands of small businesses shut down as a result of Wuhan virus regulations. Raising the minimum wage would make many of more small businesses shut down. We don’t even need studies to predict the future to prove this. We can look at what happened in the past, in cities that raised the minimum wage.

But does it work?

Here’s an example of how this works in reality, from San Francisco, a Democrat-run city.

ABC News reports:

San Francisco’s minimum wage is currently $11.05 an hour. By July of 2018, the minimum wage in San Francisco will be $15 an hour. That increase is forcing Borderlands Bookstore to write its last chapter now.

[…]Borderlands was turning a small profit, about $3,000 last year. Then voters approved a hike in the minimum wage, a gradual rise from $10.75 up to $15 an hour.

“And by 2018 we’ll be losing about $25,000 a year,” he said.

It’s an unexpected plot twist for loyal customers.

“You know, I voted for the measure as well, the minimum wage measure,” customer Edward Vallecillo said. “It’s not something that I thought would affect certain specific small businesses. I feel sad.”

Consider this story about Seattle, another Democrat-run city.

Excerpt:

Restaurants Unlimited, a Seattle-based chain with restaurant locations in 47 US cities, announced on Sunday it was seeking Chapter 11 protection, citing “progressive” wage laws.

The company, which has operated since the Lyndon Johnson Administration, said rising labor costs—part of a national trend of government-mandated minimum increases—were part of its decision.

“Over the past three years, the company’s profitability has been significantly impacted by progressive wage laws along the Pacific coast that have increased the minimum wage,” Chief Restructuring Officer David Bagley said in court filings, The Seattle Times reports. “As a large employer in the Seattle metro market, for instance, the company was one of the first in the market to be forced to institute wage hikes.”

[…]BLS data show that New York City experienced its sharpest decline in restaurant jobs since 9/11 following its passage of a $15 minimum wage law. In California, a local newspaper recently detailed how an entire business district virtually disappeared following the city’s aggressive minimum wage push.

It sounds like such a good idea to give poor people a raise, but you have to ask about how this policy affects the job creator who PAYS the wages. Minimum wage laws produce bad results. We as a nation have to decide whether we are going to vote based on feelings and peer approval, or vote based on achieving good results.

10 thoughts on “New CBO report: Biden’s minimum wage hike would cost 1.4 million jobs”

  1. I was saddened that a friend who is owner of a grocery store told me recently this will close his doors. He’s done the math and simply cannot afford the increase. The cost is much greater than his profit margin. Over four decades of labor and investment in his business, gone. The only grocery in a small town, so this affects more than the employee and employer, it affects the community as well. I can’t believe he’s the only one – this will not only kill jobs, it kills businesses.

    Liked by 2 people

    1. The profit margin for many of these small businesses is single digits percent. They can’t afford a 33% increase to wage expense. The only people who like this law are people who never studied economics and just want to feel good and be liked.

      Liked by 3 people

  2. I remember back in fall 2014 I did a presentation for my college speech class about “raising the minimum wage to 15 an hour is not the solution”. And this post is awesome. Minimum wages should be determined by each state. Every state has different costs of living. It doesn’t make sense for Nebraska to have the same minimum wage as NYC.

    Liked by 2 people

      1. Yeah, and what’s interesting about that is how many people fleeing from blue states (notably CA, NY, or Chicago) go to red states, like TX especially, its a prosperous state for a reason, it’s a red state, but they wanna then flip it into the place they just left from. Somehow, they think voting red is “racist”, “sexist,” or “xenophobic”. Coming from a Democratic area, people blindly vote Democrat, and even when they leave. They have this notion that Republicans are worse without ever looking into their policies, that’s why the Democrats rely so much on identity politics, it’s literally the driving force for their votes.

        Liked by 1 person

  3. It is also because gov’t really doesn’t want it be the one to help, they just want to pass laws and blame others for problems.

    If they didn’t raise minimum wage and just raised the tax credit so you can make more money before paying taxes it would put more money in a person’s pocket while it crippling business.

    Constantly rising taxes to be a bigger problem where I live compared to anything else.

    Liked by 1 person

  4. My Grandmother worked into her 80s doing some light clerical work. She wasn’t making 15 dollars an hour. She could have survived without the job. But I think she liked working and liked the extra money. The employer was happy for my grandmother’s work and was glad to give her the job but certainly wouldn’t have been willing to pay her $15 per hour.

    The question I have: Why is what my grandmother did so immoral that it has to be outlawed throughout the entire country?

    Liked by 1 person

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