The Obama doctrine in action!

The Obama doctrine in action!

It raises prices, lowers employment, and doesn't accomplish its goals. 

CBO: $10.10 minimum wage destroys up to a million jobs - won’t do much for the poor

We know Democrats are desperate to raise the minimum wage.  They don’t care what it does to overall employment, or the cost of goods and services, but they do know it sounds good to low-info voters.  If you’re not terribly bright and don’t have a lot of money, this sounds like a sure fire win. After all, there can’t be any downside to a wage increase, right?

Unfortunately, the Congressional Budget Office begs to differ.  In a report released yesterday, the CBO announced that raising the minimum wage to $10.10 an hour (one of the most oft-floated options) has a destructive impact on the overall employment rate, and doesn’t do much to help those living life below the poverty line.

Once fully implemented in the second half of 2016, the $10.10 option would reduce total employment by about 500,000 workers, or 0.3 percent, CBO projects (see the table below). As with any such estimates, however, the actual losses could be smaller or larger; in CBO’s assessment, there is about a two-thirds chance that the effect would be in the range between a very slight reduction in employment and a reduction in employment of 1.0 million workers.

At least Nancy Pelosi will be happy.  That’s up to a million more people who would be freed from the horrors of employment, enabling them “to chase their dreams” of becoming authors, sculptors, and painters.

The increased earnings for low-wage workers resulting from the higher minimum wage would total $31 billion, by CBO’s estimate. However, those earnings would not go only to low-income families, because many low-wage workers are not members of low-income families. Just 19 percent of the $31 billion would accrue to families with earnings below the poverty threshold, whereas 29 percent would accrue to families earning more than three times the poverty threshold, CBO estimates.

Moreover, the increased earnings for some workers would be accompanied by reductions in real (inflation-adjusted) income for the people who became jobless because of the minimum-wage increase, for business owners, and for consumers facing higher prices.

How much do you want to bet these numbers are - as usual - optimistic?

Even if they’re dead-on, that means that raising the minimum wage 40% will result in a 0.3% drop in employment. I suppose you could argue “What difference does it make” since, at this point, Obama has given the country the smallest workforce participation rate since 1978. Another 0.3% is nothing compared to the value of a new talking point.

That talking point will be that the $10.10 increase moved up to 1 million people above the poverty line. They probably won’t mention that a up to a million fewer people are actually working. As Charles Krauthammer says, that would be tough to defend since it means you’re helping a some people by obliterating the livelihoods of others.

What this is is a transfer of wealth from some low-income earners to other low-income earners. Some — of course, this is so obvious, it’s not rocket science — some will be better off, will make more, but others are going to lose everything. They’re going to lose all of their income, and they’re going to lose the first step on the ladder into employment, which is the hope for the future. So it’s a high price. You can make your choice, but there isn’t a free lunch. They are running ads saying to give America a raise, as if it’s no cost. It is a cost, and it’s other low income people who will be the ones who pay it.

Never mind that 81% of the families who benefit from this are already above the poverty line. Also, please ignore the fact that those who remain on the low end of the income ladder will actually be worse-off since the CBO says the wage hike will increase the cost of the things they buy. You’re not supposed to be reading the fine print.

When you’re talking about the ravages of “income inequality” more is always better. Got it?