Democrats’ leading proposal to increase the federal minimum wage to $17 an hour would deliver pay raises to millions of workers but would chase about 700,000 people out of jobs, according to an analysis by the Congressional Budget Office.
Those who lose jobs would disproportionately be younger and less educated, CBO said.
The bill, sponsored by Sen. Bernard Sanders, Vermont independent, and backed by a majority of Senate Democrats, would raise the wage over five years, starting with a $9.50 hourly rate next year and ticking up to $17 in 2029. Thereafter, it would be indexed to the overall job market.
The current federal minimum wage is $7.25 per hour.
CBO looked at the situation in 2029, when the $17-per-hour figure would be fully in place, and said the proposal would raise wages for 9.7 million people. It could also help millions of others whose hourly wages are just above $17 if employers yield to pressure to increase pay.
Still, 700,000 people who would have jobs under the current $7.25 rate would no longer be working under the higher minimum wage, CBO said.
Sen. Bill Cassidy of Louisiana, the top Republican on Mr. Sanders’ committee, said the CBO report should doom the chances for the $17-an-hour bill.
“A higher minimum wage does not mean much to a worker who loses their job because of it,” he said.
Mr. Cassidy is leading a group of Republicans proposing a phase-in of the minimum wage to $11 an hour and couple it with a requirement for employers to use E-Verify, the government’s current voluntary tool to try to weed illegal immigrants out of the workforce.
CBO said Mr. Sanders’ proposal would lift some 400,000 families above the poverty line.
It would also mean higher prices for some goods and services and lost revenue for some businesses. The wealthy would be particularly hit, CBO said.
Mr. Sanders’ office didn’t respond to a request for comment on the report.
Chances of a minimum wage hike clearing this Congress are next to nil, particularly given the partisan divides and the difficulty of passing even essential bills such as the annual spending measures.
The last time a minimum wage increase was approved on Capitol Hill was in 2007. It was part of a massive measure that also funded Hurricane Katrina recovery efforts and provided $120 billion to fight the wars in Iraq and Afghanistan. The Democratic-controlled Congress approved the bill, and President George W. Bush signed it.
That law lifted the national minimum wage from $5.15 to $7.25 an hour.
Thirty states have set higher minimums. No state has a rate as high as $17 an hour, though the District of Columbia does.
Mr. Sanders, chairman of the Senate Health, Education, Labor and Pensions Committee, has increased his request as time passes. In 2013, he supported a call to raise the wage to $10.10 an hour. By 2015, he was backing $15 per hour.
Noting inflation, he went higher this year.
CBO said increasing the hourly minimum wage to $17 would cost the federal government $46 billion, chiefly from paying more for health care workers through Medicare and Medicaid.
CBO said it ran 1,000 simulations and its projections are the best guess out of a range of options with wildly different outcomes.
Analysts said they determined there was a 33% chance that the job losses would be zero to 500,000, a 33% chance of 500,000 to 1.4 million, and a 33% chance of extreme cases, including actual gains in employment or losses of more than 1.4 million jobs.
At the 700,000 job-loss level, building gradually as the wage rate increases, some of those who become unemployed early on will have dropped out of the labor force altogether by 2029, CBO said.
• Stephen Dinan can be reached at sdinan@washingtontimes.com.
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