Programs such as Medicare, Medicaid and Obamacare dominate health spending in the U.S., and raising the minimum wage would increase costs to the programs because it would mean having to pay more for some health services. The District of Columbia has a $15 wage rate, for example.ĬBO’s analysis underscored the depths of the federal government’s reach into America’s economy. In many cases, cities have gone even higher. While the federal minimum wage is $7.25, most states have a higher wage, up to $14 an hour in California. “What that means is that we can clearly raise the minimum wage to $15 an hour under the rules of reconciliation,” Mr. That process is known as “reconciliation.” Sanders said that boosts Democrats’ argument that it’s proper to tuck a wage increase into the coronavirus bill, which must fit within narrow budget rules to be considered under protections against a filibuster. What is clear, though, is that raising the minimum wage would have a serious budget effect. Sanders, meanwhile, said the CBO’s deficit projection was out of whack, saying the office found a much smaller dent two years ago. The institute also doubted the CBO job loss projections, calling them “just wrong and inappropriately inflated relative to what cutting-edge economics literature would indicate.” “In short, given which parts of the workforce have economically suffered the most from the pandemic, it seems more than appropriate to include a minimum wage increase in any relief and rescue package,” wrote Josh Bivens and other analysts at the Economic Policy Institute. Left-leaning economists cheered that news, saying low-wage workers have earned better pay. The better wages would lift 900,000 people out of poverty by 2025. “Young, less educated people would account for a disproportionate share of those reductions in employment,” CBO said.īut the flip side is that 17 million people who would be making less than $15 an hour would see their income raised, as would another 10 million who would be making just above the minimum rate, CBO said. Half of those would be unemployed and looking for jobs, but half would have left the labor force altogether, the analysts said. After that, it would be raised automatically to keep pace with wage inflation.ĬBO said job losses would accumulate over the years, and by 2025 1.4 million fewer people would be working, thanks to the increase. He calls for raising the federal wage from its current $7.25 rate to $9.50 on June 1, moving to $11 on June 1, 2022, $12.50 a year later, $14 in 2024, and $15 in June 2025.
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