The bickering about increasing the minimum wage continues, stirred up by the CBO report I mentioned yesterday. See here and here, for a taste of the discussion.
If anything, the CBO’s report convinces me that a 40% increase in the minimum wage would be problematic. The report rather clearly states that a 24% increase would destroy significantly fewer jobs than a 40% increase would. And a close reading of the report suggests that much of the benefit of a minimum wage increase would be realized by white teenagers living at home with Mommie and Daddy in reasonably prosperous circumstances while the pain would be born by black teenagers. I don’t find that an acceptable outcome.
I pointed out some of the shortcomings in the CBO report yesterday. There’s one thing that puzzles me. The 500,000 jobs lost figure for a 40% increase in the minimum wage seems to be a brute force, split-the-difference figure between zero jobs lost and a million jobs lost. Does the CBO really believe that all of the probabilities from zero to a million are equally likely?
Update
Alexis Simendinger read it the same way I do. If there’s an increase in the minimum wage, it might well be to $9.00 rather than to $10.10.
From my perspective, the CBO analysis was worse than expected because I am skeptical that increasing the minimum wage causes job losses, as opposed to reduces future job growth. And I think the CBO agrees, but apparently finds long-term studies too difficult to construct:
“Employment reductions after a minimum-wage increase are probably larger over a longer term, in part because those reductions may be less attributable to the elimination of existing low-wage jobs than to slower growth in the number of low-wage jobs, which is difficult to detect in short-term studies.”
I wouldn’t support a hike with such a weak job market, but a compromise would be to trigger an increase to improved unemployment levels (U6).
I support an expanded EITC based on hours worked. I think Republican wonks are being disingenuous when they promote it as an alternative without also saying it would need to be paid for somehow.
The CBO took studies from across the board which showed relative insensitivity to the minimum wage regarding employment and somehow arrived at the conclusion of enhanced sensitivity. I would not take that 500,000 figure as reliable.