A new report from the Congressional Budget Office (CBO) has estimated the impact of raising the federal minimum wage to $ 15, $ 12 or $ 10 per hour by 2025. According to the CBO's estimates, raise the minimum wage to $ 15 per hour would increase wages for 17 million workers. According to CBO, this would also mean an average loss of 1.3 million employees, as employers can not afford to pay the wage – this is a reduction of 0.8% in the number of workers.
According to CBO, if the federal minimum wage were raised to $ 15 an hour, there would be a 66% chance that between 3.7 and 3.7 million people would lose their jobs. However, the report indicates that there is considerable uncertainty as to the extent of the effect of each option on employment.
But those who earn less than $ 15 would not be the only ones to suffer a salary increase. Those who earn just over 15 dollars According to CBO estimates, 10 million additional workers would also benefit from an increase in their wages through an increase in the minimum wage.
The report also found other benefits. According to the CBO's analysis, 1.3 million people whose income was below the poverty line would see wages rise above this threshold.
Increase salary
The federal minimum wage is currently $ 7.25 per hour and Congress has not increased the salary for more than ten years, the longest period in history. Since the minimum wage was created in 1938, it has been irregularly increased at the will of Congress. According to the Economic Policy Institute (EPI), the minimum wage has been increased nine times since 1938. Over the last 81 years, the minimum wage has gone from 25 cents to $ 7.25.
Currently, 29 states and the United States have a minimum wage above the federal minimum wage of $ 7.25 per hour.
A survey conducted in January found that 55% of registered voters said they would support an increase in the minimum wage to $ 15, and 27% said it should be increased, but to a lesser extent. measured. The increase in the minimum wage examined by CBO is similar to that advocated in the 2019 Salary Increase Act, which would raise the minimum wage to $ 15 by 2024 and would then be indexed to the growth of wages. wages.
The increase in the minimum wage has become a hot topic among policymakers and business leaders, with some large companies having announced increases. Presidential candidates Kamala Harris, Joe Biden, Bernie Sanders, Elizabeth Warren, Amy Klobuchar, Beto O'Rourke, Julian Castro and John Hickenlooper all publicly declared fighting for a minimum wage of $ 15 if they were to win the White House in 2020.
Although the CBO report indicates that 27 million people would benefit from a pay raise, the EPI analysis shows that raising the federal minimum wage to $ 15 would increase the wages of about 40 million workers, more than a quarter of the salaried workforce.
While inflation levels are holding steady, the purchasing power of the current minimum wage has been gradually eroding over the last decade. Since the minimum wage was raised to $ 7.25, its purchasing power has decreased by 17%. It is a loss of $ 3,000 in annual earnings for full-time minimum wage workers. Since reaching its peak of purchasing power in 1968, the minimum wage has lost 31% of its purchasing power. This means that actually, minimum wage workers "earn" more than $ 6,800 less than in 1968 – while the minimum wage was only $ 1.60.
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American fast food worker protests $ 15 minimum wage
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NEW YORK, NY – NOVEMBER 10: Low-wage workers and their supporters are protesting for a minimum wage of $ 15 hourly on November 10, 2015 in New York, United States. In what the organizers call a National Day of Action for $ 15 and the minimum wage per hour, thousands of people took to the streets of the country to hold demonstrations in front of companies that pay the minimum wage to some of their workers. Home care workers, retail store employees and fast-food restaurants say the current minimum is not a living wage. (Photo by Spencer Platt / Getty Images)
NEW YORK, NY – NOVEMBER 10: New York City Mayor Bill de Blasio speaks to support low-wage workers, many of them in the fast-food industry, whereas they join their supporters to demand a minimum wage of $ 15 hourly on November 10, 2015 in New York, United States. In what the organizers call a National Day of Action for $ 15 and the minimum wage per hour, thousands of people took to the streets of the country to hold demonstrations in front of companies that pay the minimum wage to some of their workers. Home care workers, retail store employees and fast-food restaurants say the current minimum is not a living wage. (Photo by Spencer Platt / Getty Images)
NEW YORK, NY – NOVEMBER 10: Low-wage workers and their supporters are protesting for a minimum wage of $ 15 hourly on November 10, 2015 in New York, United States. In what the organizers call a National Day of Action for $ 15 and the minimum wage per hour, thousands of people took to the streets of the country to hold demonstrations in front of companies that pay the minimum wage to some of their workers. Home care workers, retail store employees and fast-food restaurants say the current minimum is not a living wage. (Photo by Spencer Platt / Getty Images)
NEW YORK, NY – NOVEMBER 10: Low-wage workers and their supporters are protesting for a minimum wage of $ 15 hourly on November 10, 2015 in New York, United States. In what the organizers call a National Day of Action for $ 15 and the minimum wage per hour, thousands of people took to the streets of the country to hold demonstrations in front of companies that pay the minimum wage to some of their workers. Home care workers, retail store employees and fast-food restaurants say the current minimum is not a living wage. (Photo by Spencer Platt / Getty Images)
NEW YORK, NY – NOVEMBER 10: Low-wage workers and their supporters are protesting for a minimum wage of $ 15 hourly on November 10, 2015 in New York, United States. In what the organizers call a National Day of Action for $ 15 and the minimum wage per hour, thousands of people took to the streets of the country to hold demonstrations in front of companies that pay the minimum wage to some of their workers. Home care workers, retail store employees and fast-food restaurants say the current minimum is not a living wage. (Photo by Spencer Platt / Getty Images)
NEW YORK, NY – NOVEMBER 10: Low-wage workers and their supporters are protesting for a minimum wage of $ 15 hourly on November 10, 2015 in New York, United States. In what the organizers call a National Day of Action for $ 15 and the minimum wage per hour, thousands of people took to the streets of the country to hold demonstrations in front of companies that pay the minimum wage to some of their workers. Home care workers, retail store employees and fast-food restaurants say the current minimum is not a living wage. (Photo by Spencer Platt / Getty Images)
NEW YORK, NY – NOVEMBER 10: Low-wage workers and their supporters are protesting for a minimum wage of $ 15 hourly on November 10, 2015 in New York, United States. In what the organizers call a National Day of Action for $ 15 and the minimum wage per hour, thousands of people took to the streets of the country to hold demonstrations in front of companies that pay the minimum wage to some of their workers. Home care workers, retail store employees and fast-food restaurants say the current minimum is not a living wage. (Photo by Spencer Platt / Getty Images)
FORT LAUDERDALE, FL – SEPTEMBER 10: Laura Rollins joins other people to demonstrate in front of a McDonald's restaurant in favor of a $ 15 minimum wage on September 10, 2015 in Fort Lauderdale, Florida. Seattle, San Francisco and Los Angeles are among the cities that have adopted a minimum wage of $ 15 per hour. (Photo by Joe Raedle / Getty Images)
FORT LAUDERDALE, FL – SEPTEMBER 10: Laura Stone joins other people in protesting a minimum wage of $ 15 at the time of September 10, 2015 in Fort Lauderdale, Florida. Seattle, San Francisco and Los Angeles are among the cities that have adopted a minimum wage of $ 15 per hour. (Photo by Joe Raedle / Getty Images)
CHICAGO, IL – JUNE 22: Marie Gasaway protests with fast food workers and community activists in front of a McDonald's restaurant in the Loop on June 22, 2015 in Chicago, Illinois. The demonstrators demanded an increase in the minimum wage to $ 15 per hour. The event was organized to coincide with the Wage Board's 4th hearing in New York, as it debated an increase of $ 15 an hour for its workers. (Photo by Scott Olson / Getty Images)
FORT LAUDERDALE, FL – SEPTEMBER 10: Protesters in favor of a minimum wage of $ 15 / hour walk together on September 10, 2015 in Fort Lauderdale, Florida. Seattle, San Francisco and Los Angeles are among the cities that have adopted a minimum wage of $ 15 per hour. (Photo by Joe Raedle / Getty Images)
CHICAGO, IL – JUNE 22: A woman is calling for change as fast food workers and community activists protest outside a McDonald's restaurant in the Loop on June 22, 2015 in Chicago, Illinois. The demonstrators demanded an increase in the minimum wage to $ 15 per hour. The event was organized to coincide with the Wage Board's 4th hearing in New York, as it debated an increase of $ 15 an hour for its workers. (Photo by Scott Olson / Getty Images)
CHICAGO, IL – JUNE 22: Juan Hernandez, age 8, protests with his mother, who works for McDonald's, and other fast food workers and community activists in front of a McDonald's restaurant located in the Loop on June 22, 2015 in Chicago, Illinois. The demonstrators demanded an increase in the minimum wage to $ 15 per hour. The event was organized to coincide with the Wage Board's 4th hearing in New York, as it debated an increase of $ 15 an hour for its workers. (Photo by Scott Olson / Getty Images)
CHICAGO, IL – JUNE 22: Fast food workers and community activists demonstrate in front of a McDonald's restaurant in the Loop on June 22, 2015 in Chicago, IL. The demonstrators demanded an increase in the minimum wage to $ 15 per hour. The event was organized to coincide with the Wage Board's 4th hearing in New York, as it debated an increase of $ 15 an hour for its workers. (Photo by Scott Olson / Getty Images)
CHICAGO, IL – JUNE 22: Fast food workers and community activists demonstrate in front of a McDonald's restaurant in the Loop on June 22, 2015 in Chicago, IL. The demonstrators demanded an increase in the minimum wage to $ 15 per hour. The event was organized to coincide with the Wage Board's 4th hearing in New York, as it debated an increase of $ 15 an hour for its workers. (Photo by Scott Olson / Getty Images)
Protesters march in front of a McDonald's restaurant Corp. at a rally in Oak Brook, Illinois, United States, on Wednesday, May 20, 2015. Union activists seeking a salary of $ 15 per hour marched Wednesday at McDonald's headquarters & # 39; s, marking the second consecutive year of events. before the annual meeting of the fast food chain. Photographer: Daniel Acker / Bloomberg via Getty Images
CHICAGO, IL – JUNE 22: Fast food workers and community activists demonstrate in front of a McDonald's restaurant in the Loop on June 22, 2015 in Chicago, IL. The demonstrators demanded an increase in the minimum wage to $ 15 per hour. The event was organized to coincide with the Wage Board's 4th hearing in New York, as it debated an increase of $ 15 an hour for its workers. (Photo by Scott Olson / Getty Images)
Protesters parade at a rally near a McDonald's restaurant Corp. and head office in Oak Brook, Illinois, United States on Wednesday, May 20, 2015. Union activists seeking a salary of $ 15 per hour marched Wednesday at McDonald's headquarters, scoring the second consecutive day year of events before the annual meeting of the fast food chain. Photographer: Daniel Acker / Bloomberg via Getty Images
A protester carries a "People and Planet Over Profit" sign at a rally near a McDonald's restaurant. and headquartered in Oak Brook, Illinois, United States on Wednesday, May 20, 2015. Union activists are seeking a salary of $ 15 an hour marched Wednesday at McDonald's headquarters, scoring the second consecutive year of events before the annual meeting of the fast food chain. Photographer: Daniel Acker / Bloomberg via Getty Images
Protesters parade at a rally near the headquarters of McDonald's Corp. in Oak Brook, Illinois, United States, Wednesday, May 20, 2015. Union activists seeking a salary of $ 15 per hour marched Wednesday at McDonald's headquarters, marking the second year consecutive events of the annual meeting of the fast food chain. Photographer: Daniel Acker / Bloomberg via Getty Images
Protesters parade at a rally near the headquarters of McDonald's Corp. in Oak Brook, Illinois, United States, Wednesday, May 20, 2015. Union activists seeking a salary of $ 15 per hour marched Wednesday at McDonald's headquarters, marking the second year consecutive events of the annual meeting of the fast food chain. Photographer: Daniel Acker / Bloomberg via Getty Images
Home health workers and other protesters are demonstrating Wednesday at a rally in support of raising the minimum wage in New York, United States, on Wednesday, April 15, 2015. The Fast food workers held rallies in 236 US cities on Wednesday. wages and union rights. Photographer: Victor J. Blue / Bloomberg via Getty Images
Home health workers demonstrated Wednesday at a rally in favor of raising the minimum wage in New York, United States, Wednesday, April 15, 2015. Workers in the restaurant sector Fast-forward rallies took place in 236 US cities on Wednesday as part of their largest protest to date. rights. Photographer: Victor J. Blue / Bloomberg via Getty Images
On Wednesday, April 15, 2015, protesters demonstrated on Wednesday in support of the raising of the minimum wage in New York, USA. Fast food workers organized rallies in 236 US cities as part from their biggest protest to date for higher wages and higher union rights. Photographer: Victor J. Blue / Bloomberg via Getty Images
On Wednesday, April 15, 2015, protesters demonstrated on Wednesday in support of the raising of the minimum wage in New York, USA. Fast food workers organized rallies in 236 US cities as part from their biggest protest to date for higher wages and higher union rights. Photographer: Victor J. Blue / Bloomberg via Getty Images
Protesters hold a Ronald McDonald puppet at a rally in favor of raising the minimum wage in New York, United States, on Wednesday, April 15, 2015. Fast-food workers have organized rallies in 236 US cities Wednesday as part of their larger trade union rights protest. Photographer: Victor J. Blue / Bloomberg via Getty Images
Signs were on the street before the start of a demonstration in favor of raising the minimum wage in New York, United States, on Wednesday, April 15, 2015. Workers in the fast food sector have held rallies in 236 US cities on Wednesday in their biggest protest against an increase in salaries. and trade union rights. Photographer: Victor J. Blue / Bloomberg via Getty Images
On Wednesday, April 15, 2015, protesters demonstrated on Wednesday in support of the raising of the minimum wage in New York, USA. Fast food workers organized rallies in 236 US cities as part from their biggest protest to date for higher wages and higher union rights. Photographer: Victor J. Blue / Bloomberg via Getty Images
CHICAGO, IL – APRIL 15: Protesters gather in front of a McDonald's restaurant to request an increase in the minimum wage on April 15, 2015 in Chicago, Illinois. The event was one of many events held across the country to draw attention to the cause. (Photo by Scott Olson / Getty Images)
CHICAGO, IL – APRIL 15: Protesters gather in front of a McDonald's restaurant to request an increase in the minimum wage on April 15, 2015 in Chicago, Illinois. The event was one of many events held across the country to draw attention to the cause. (Photo by Scott Olson / Getty Images)
CHICAGO, IL – APRIL 15: Protesters gather in front of a McDonald's restaurant to request an increase in the minimum wage on April 15, 2015 in Chicago, Illinois. The event was one of many events held across the country to draw attention to the cause. (Photo by Scott Olson / Getty Images)
Fast food workers, health professionals and their supporters shout slogans at a rally and defend the minimum wage at $ 15 an hour in Los Angeles on December 4, 2014. The protest should touch 190 American cities. AFP PHOTO / ROBYN BECK (Photo credit must match ROBYN BECK / AFP / Getty Images)
Fast food workers, health professionals and their supporters shout slogans at a rally and defend the minimum wage at $ 15 an hour in Los Angeles on December 4, 2014. The protest should touch 190 American cities. AFP PHOTO / ROBYN BECK (Photo credit must match ROBYN BECK / AFP / Getty Images)
Two women order food on strike, home health workers and their support shouting slogans in a MCDonalds at a rally and march to request a minimum wage increase at $ 15 per hour in Los Angeles on December 4, 2014. The country The event is expected to reach 190 US cities. AFP PHOTO / ROBYN BECK (Photo credit must match ROBYN BECK / AFP / Getty Images)
NEW YORK, NY – DECEMBER 04: Protesters march in the streets to demand a minimum wage increase at $ 15 on December 4, 2014 in New York, USA. The movement, mainly motivated by fast food workers, has grown in the past year; Protesters, dissatisfied with the verdict of the grand jury, also joined the protest not to indict the police officer who killed Eric Garner in July 2014. (Photo by Andrew Burton / Getty Images)
NEW YORK, NY – DECEMBER 04: Protesters march through a McDonalds asking for a minimum wage increase at $ 15 on December 4th, 2014 in New York, United States. The movement, mainly motivated by fast food workers, has grown in the past year; Protesters, dissatisfied with the verdict of the grand jury, also joined the protest not to indict the police officer who killed Eric Garner in July 2014 (photo by Andrew Burton / Getty Images).
WASHINGTON, DC – DECEMBER 04: US Senator Bernie Sanders (I-VT) speaks to low-paid federal contractors at a protest at which they demanded a presidential action to win an increase of 15 dollars per hour on December 4, 2014 in Washington. DC A number of workers had to leave their jobs later in the day as part of the protest. (Photo by Win McNamee / Getty Images)
WASHINGTON, DC – DECEMBER 04: Low-paid federal workers block rush-hour traffic on Independence Avenue while calling for presidential action to raise wages by $ 15 an hour on December 4, 2014 to Washington, DC. A number of workers had to leave their jobs later in the day as part of the protest. (Photo by Win McNamee / Getty Images)
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Negative impacts
Critics say the increase in the minimum wage would make jobs lose to their employees. Although the report recognizes that more than 3.7 million people could lose their jobs, EPI believes that the increase in the minimum wage would offset costs. They also wonder if so many people would be unemployed if the minimum wage were $ 15.
"Increasingly, economists recognize that simple and outdated business models, which always predict a loss of employment when the minimum wage is increased, are based on assumptions that have little impact on the labor market. low-wage work, "said EPI in a statement. "More than 100 traditional economists have subscribed to this letter in favor of raising the minimum wage to $ 15 by 2024. CBO's evaluation of the literature has simply not been caught up."
In the other two models – raising wages to $ 12 and $ 10 – the report found that only 300,000 or 100,000 people would lose their jobs, respectively.
The impact on the federal budget is even less clear. The CBO report states that it "did not estimate the impact of the options in this report on the federal budget".
However, the report continues, he estimated the impact of the law on increasing wages. In this analysis, CBO writes that "over the next ten years, the bill would increase expenditures subject to annual appropriation laws by $ 76 million and increase mandatory postal service expenditures by $ 1 million. ".
Kristin Myers is a Yahoo Finance journalist. Am here on Twitter.
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