- Higher salaries, but not just for minimum wage workers
- Higher spending for Medicaid, Medicare and ACA subsidies
- Higher prices for goods and services, especially health care related
- Higher federal deficits
- Lower spending on programs such as SNAP
- The number of people in poverty would be reduced by 0.9 million.
These are among the conclusions of a new CBO report on raising the minimum wage. Higher prices, higher demand = inflation. Higher health care costs = inflation. Higher costs for employers including payroll taxes = inflation. Loss of eligibility for SNAP may mean no net gain for MW workers.
So, taken in total, what has been accomplished in the long run for the minimum wage worker? We have a strange way of looking at things. But we will all feel better because we raised the minimum wage.
“If enacted at the end of March 2021, the Raise the Wage Act of 2021 (S. 53, as introduced on January 26, 2021) would raise the federal minimum wage, in annual increments, to $15 per hour by June 2025 and then adjust it to increase at the same rate as median hourly wages. In this report, the Congressional Budget Office estimates the bill’s effects on the federal budget.
- The cumulative budget deficit over the 2021–2031 period would increase by $54 billion. Increases in annual deficits would be smaller before 2025, as the minimum-wage increases were being phased in, than in later years.
- Higher prices for goods and services—stemming from the higher wages of workers paid at or near the minimum wage, such as those providing long-term health care—would contribute to increases in federal spending.
- Changes in employment and in the distribution of income would increase spending for some programs (such as unemployment compensation), reduce spending for others (such as nutrition programs), and boost federal revenues (on net).
Those estimates are consistent with CBO’s conventional approach to estimating the costs of legislation. In particular, they incorporate the assumption that nominal gross domestic product (GDP) would be unchanged. As a result, total income is roughly unchanged. Also, the deficit estimate presented above does not include increases in net outlays for interest on federal debt (as projected under current law) that would stem from the estimated effects of higher interest rates and changes in inflation under the bill. Those interest costs would add $16 billion to the deficit from 2021 to 2031.”
SOURCE: Congressional Budget Office 2-8-21