Report: $15-an-hour minimum wage would reduce poverty but also cost jobs

By: - February 8, 2021 2:12 pm

Iowa’s unemployment rate was up slightly as more people entered the workforce. (Photo by Jetta Productions Inc./Getty Images)

WASHINGTON — The nonpartisan Congressional Budget Office in a report Monday found a gradual increase to a $15 federal minimum wage by 2025 would reduce poverty, add $54 billion to the deficit over a decade and increase pay for millions of low-income workers.

The report also says the move would lead to a loss of 1.4 million jobs.

Even so, some Democrats said the report could help them make a strong case for including a gradual federal minimum wage increase in the $1.9 trillion relief package put forth by the Biden administration. 

The reconciliation process allows legislation to pass on a simple majority vote in the Senate if it affects the federal deficit, and the CBO analysis found the minimum wage increase does that.

The report said that 900,000 people would be lifted out of poverty and 17 million would experience a wage increase under the pay boost. In the United States, about 38 million people live in poverty.

Reliance on federal social programs such as nutrition programs would decrease, but the demand for programs such as unemployment benefits would increase, as the report found that 1.4 million jobs would be cut.

House Education and Labor Chairman Bobby Scott, D-Va., said in a statement that Monday’s report strengthens the case for gradually increasing the minimum wage in the COVID-19 stimulus package.

The current federal minimum wage is $7.25 and the last time it was raised was in 2009, from $6.55 to $7.25. Iowa’s minimum wage matches the federal level at $7.25 an hour.

“This nonpartisan report shows that increasing the minimum wage will act as a direct and targeted stimulus for struggling workers and their families,” he said.

“At a time when many of our essential workers are still not being paid enough to provide for themselves and their families, we must do everything in our power to give these workers a long overdue raise.”

The Biden administration has pushed for a minimum wage hike in its $1.9 trillion stimulus coronavirus relief package, though the Senate passed a messaging amendment in its debate on the budget resolution barring an increase during a global pandemic.

And not all Democrats agree with the increase.

Sen. Joe Manchin, D-W.Va., a key vote in a Senate split 50-50, has said that he doesn’t support a $15 minimum wage. The minimum wage in West Virginia is currently $9.50 an hour and will go up to $10.25 this year.

Currently, 29 states and the District of Columbia have a higher minimum wage than the current federal wage.

Florida recently passed an amendment that would increase the state’s minimum wage to $15 an hour by 2026. Five states that don’t have a state minimum wage include Alabama, Louisiana, Mississippi, South Carolina and Tennessee.

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Ariana Figueroa
Ariana Figueroa

Ariana covers the nation's capital for States Newsroom. Her areas of coverage include politics and policy, lobbying, elections and campaign finance.