Raise the Wage Act Will Positively Impact Workers
July 11, 2019
This week, the nonpartisan Congressional Budget Office (CBO) released its report on H.R. 582, the Raise the Wage Act. This legislation would gradually increase the U.S. federal minimum wage to $15 an hour by 2024 and would further eliminate the tipped wage of $2.13 by gradually raising it to meet the federal minimum wage of $15 an hour. NETWORK strongly supports this bill as it would substantially reduce income inequality and poverty across the United States. The CBO report highlights the numerous ways this bill will benefit low-income workers, as outlined by the Economic Policy Institute.
Some groups have responded to the CBO report by pulling out selective data chosen to alarm the public about the costs of raising the minimum wage. We believe, however, that the data supports our stance in favor of raising the wage. According to the report, 27 million low-income workers’ wages would increase with a $15 minimum wage. Low-wage workers would see their annual earrings rise by $44 billion by 2025. Moreover, a $15 minimum wage would lift 1.3 million people out of poverty. This bill will have a profound impact on reducing rampant inequality in the U.S. by raising the wages of the lowest-income workers.
The CBO report further demonstrates that the benefits of this bill greatly outweigh potential costs. Even accounting for their prediction of some job losses, the CBO concluded that the average low-wage worker would earn $1,600 more per year. The CBO’s job loss prediction was also based on faulty methodology that focused primarily on subgroups of workers like restaurant employees. Studies that look holistically at the low-wage workforce find that a $15 minimum wage does not reduce employment.
Research conducted by the Quarterly Journal of Economics found that across 138 state-level minimum wage increases, there were no measurable employment losses. For example, between 1979 and 2016, states with the highest minimum wage increases experienced no negative employment effects. Minimum wage increases at the city-level have had no detrimental impact on restaurant employment levels. In 1968, when the U.S. had its highest minimum wage adjusted for inflation, there was no adverse impact on employment. Thus, while the CBO’s central estimate predicted some job losses, its other “likely” estimates projected that there may be no job losses as a result of a $15 minimum wage in 2025.
Even if the CBO’s job loss predictions were fully accurate, a $15 minimum wage would still tremendously benefit low-wage workers. According the CBO, 7% of the lowest-wage workers could face job losses, while 93% would earn 12% more an hour. An additional 10.3 million people would earn above $15 an hour by 2025 with no employment reductions. Furthermore, because jobs will pay higher wages, even workers experiencing “job-losses” would likely have higher annual incomes due to wage increases. The CBO acknowledged that families may be able to cut back working hours or the number of jobs per family with higher wages, contributing to these “job-loss” statistics. Thus, these job-loss numbers are best interpreted as fewer hours worked throughout the year because there will be a reduced need to work extreme hours to make a living wage.
NETWORK and our partners are incredibly proud to support the Raise the Wage Act. For decades, the U.S. workforce has been exploited under a system that fails to guarantee workers a living wage. The Raise the Wage Act is a first step in truly transforming our economy into a moral economy.