On Tuesday, the Congressional Budget Office (CBO) released a report estimating the effects of raising the federal minimum wage from $7.25 to $10.10 per hour, as proposed by the Obama administration. The report intensified the debate within the political and media establishment over a possible increase in the minimum wage.
The report concluded that the minimum wage hike would increase pay for 16.5 million Americans, but eliminate 500,000 jobs. According to the CBO report, the increase would lift 900,000 people, or 0.2 percent of the population, out of poverty. This is a tiny fraction of the 46.5 million people—or 15 percent of the population—now living below the federal poverty line.
The Democratic proposal would leave the minimum wage at a lower level, in real terms, than it was in 1968, nearly 50 years ago. At $10.10 an hour, a worker laboring 34 hours a week—the average in America—would earn an annual pre-tax income of $17,856. This is significantly lower than the government’s absurdly low poverty threshold for a family of three.