Here’s a follow-up to our recent Kentucky Tonight discussion about raising the minimum wage.
As you know, President Obama and many Congressional Democrats want to increase the current minimum wage from $7.25 to $10.10 per hour. In Kentucky, House Speaker Greg Stumbo (D-Prestonsburg) has proposed a similar increase over three years with his House Bill 1.
The nonpartisan Congressional Budget Office, whose views influence legislation being considered by Congress, delivered a mixed conclusion on how raising the minimum wage would affect incomes, employment, and the federal budget. According to a New York Times story on the report, an increase could reduce total employment by 500,000 workers in 2016, but it would move 900,000 families out of poverty. The CBO report also found that 16.5 million workers would get a raise if Congress passes the minimum wage bill.
I asked two panelists from the Kentucky Tonight program on the minimum wage to weigh in on the CBO report. Here’s the reply from Tod Griffin, president of the Kentucky Retail Federation:
Tuesday’s CBO report on the effects of an increase in the minimum wage to $10.10 per hour indicates a loss of up to 1 million jobs as labor costs to employers becomes too expensive.
When the government forces artificial wage inflation, employers have no choice but to reduce the size of the workforce in order to make payroll. Kentucky’s small business owners simply cannot absorb a 39 percent increase in the cost of labor without serious consequences.
Kentucky’s unemployment rate still sits at 8 percent with some rural counties recording unemployment rates above 15 percent. In a February Gallup Poll, nearly one in four Americans mentioned jobs and unemployment as the most important problem facing the country. The anxiety about unemployment is clearly on the rise as only 16 percent said they were most worried about jobs in the same poll one month ago.
Clearly, now is not the time for government intervention in the marketplace.
Here’s the response from Anna Baumann, research and policy associate for the Kentucky Center for Economic Policy:
24.5 million low-wage workers would see their earnings go up if the federal minimum wage were increased to $10.10 over the next three years, according to the new analysis from the Congressional Budget Office. The CBO also finds that the increase would lift 900,000 Americans above the poverty line and reduce income inequality without impacting the federal budget.
These 24.5 million workers account for 98 percent of those the CBO estimates would be affected by the increase. The remaining 2 percent represent the 500,000 fewer jobs that the CBO projects will result. The CBO’s estimate assumes larger job losses than the extensive body of research on this question suggests is likely.
Even if that projection proves accurate, the benefits of raising the federal minimum wage from $7.25 to a more decent $10.10 per hour clearly outweigh the costs for the greater good of the vast majority of hard-working, low-wage Americans.
Monday on Kentucky Tonight, we’ll tackle another controversial issue: expanded gambling in the Commonwealth. With the General Assembly now beyond the half-way point of the 2014 session, some think there’s not enough time to pass a bill to put the issue on the November ballot so voters can decide the question. Others think that behind-the-scenes momentum is building for passage of expanded gambling legislation.
As always, let us know what you have to say about the issue this Monday at 8 p.m. on KET.