President Obama’s chief economist on Tuesday blasted the Congressional Budget Office for a report on the impact of raising the minimum wage, claiming the non-partisan CBO’s findings do not represent the best latest economic thinking on the subject.
The CBO report found that the president’s proposal to raise the federal minimum wage to $10.10 per hour, a 39 percent increase over the current rate of $7.25, would cost the economy about 500,000 jobs. The job losses would be offset by increased wages for 16.5 million workers, nearly a million of whom would be lifted above the federal poverty line.
However, in a lengthy blog post on the White House web site, Jason Furman, chairman of the White House Council of Economic Advisers and Betsey Stevenson, a member of the Council, wrote, “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.”
Furman and Stevenson cited research finding that increasing wages can have payoffs to business in the form of better retention, higher productivity, and reduced absenteeism. “CBO’s estimates do not appear to fully reflect the increased emphasis on all of these factors from the recent economics literature,” they wrote.
However, other economists assessing the CBO data didn’t find it wildly off the mark.
In an interview with The Fiscal Times on Tuesday, Center on Budget and Policy Priorities Senior Fellow Jared Bernstein, who worked in the Obama White House as chief economist to Vice President Joe Biden, said that while he thought the CBO estimate of job losses was a little high, it also wasn’t out of the mainstream.
“CBO chose a slightly higher negative effect than I think the best research would support,” he said. “But they’re not off the reservation.”
Top Reads from The Fiscal Times