A proposed national minimum wage hike to $17 per hour by 2029 would come at an estimated cost of 700,000 American jobs, according to the nation’s Congressional Budget Office.
The bill is S.2488 – Raise the Wage Act of 2023. Sen. Bernie Sanders, I-Vt., is the listed sponsor. It has been introduced, but it hasn’t been passed by either chamber of Congress yet.
Sanders was on social media on Monday railing against the wealthy elite.
“Corporate greed is Mark Zuckerberg becoming $3.4 billion richer TODAY while building a $100 million mansion in Hawaii with 30 bathrooms and an underground bunker. Meanwhile, a record-breaking 653,000 Americans are homeless & over 60% of our workers live paycheck to paycheck,” he wrote on X.
Some stats in the report support Sanders’ effort. This includes that an estimated 8.9 million workers with wages under $17 per hour could be affected. It is estimated that 400,000 could be lifted out of poverty by such increases.
The full report can be read here.
The report also notes that anytime wages are raised, the cost of the goods or services will rise accordingly.
“Higher prices for goods and services—stemming from the higher wages of workers who are paid at or near the minimum wage (such as workers who provide long-term health care)—would contribute to increases in federal spending.”
Another part of the report states more about how much would be gained in wages versus lost in jobs.
It states, “Those gains in earnings would be larger than the aggregate earnings losses from higher rates of joblessness. Thus, the income of families with low-wage workers would increase, on average, and the number of families below the FPL [Federal Poverty Level] would decrease. Higher-income families would experience a decline in purchasing power because prices for goods and services would increase.”
It continues that there will be other economic impacts. For example, with 700,000 new unemployed that means the cost of unemployment benefits will go up. The report also suggests that the of programs like food stamps will go down.
“The largest spending increases would be for the government’s major health care programs and unemployment compensation; the largest revenue decreases would be from income taxes,” the report states.
Sanders doesn’t like tipping?
Another component of the bill would be to do away with tipping. The report addresses this aspect as well.
“It would boost the earnings of most of those workers through higher wages but also reduce the earnings of some through higher rates of joblessness. Part of the increase in earnings through higher wages would be offset by lower income from tips,” it states.
Interest rates would go up
Another assessment from the report is that interest rates go up.
“In CBO’s assessment, the Raise the Wage Act of 2023 would cause interest rates to be slightly higher than they otherwise would have been over the 2024–2033 period. The Federal Reserve would adjust short-term interest rates to counteract the increase in overall demand and inflation stemming from the rising minimum wage.”
Been tried before
Over the years mandates in other states to aggressively bump up minimum wage have shown that the net impacts are sometimes unfavorable to the very people it is intended to help.
TrueNorthReports noted one such study that took place in Seattle.
“A 2017 study of Seattle’s wage increase by the National Bureau of Economic Research concluded that ‘the second wage increase to $13 reduced hours worked in low-wage jobs by around 9 percent, while hourly wages in such jobs increased by around 3 percent.’”
Michael Bielawski | Vermont Daily Chronicle
