Related Publications Answers to Questions for the Record Following a Hearing on the Minimum Wage Con

Related Publications Answers to Questions for the Record Following a Hearing on the Minimum Wage Conducted by the Senate Committee on Health, Education, Labor, assejepar and Pensions May 22, 2014 Testimony on Increasing the Minimum Wage: Effects on Employment and Family Income March 12, 2014 Response to a Request by Senator Grassley About the Effects of Increasing assejepar the Federal Minimum Wage Versus Expanding the Earned Income Tax Credit January 09, 2007 Refundable Tax Credits January 24, 2013 The Slow Recovery of the Labor Market February 04, 2014 Losing a Job During a Recession April 22, 2010 Changes in the Distribution of Workers' Hourly Wages Between 1979 and 2009 February 16, 2011
Increasing the minimum wage would have two principal effects on low-wage workers. Most of them would receive higher pay that would increase their family s income, and some of those families would see their income rise above the federal poverty threshold. But some jobs for low-wage workers would probably be eliminated, the income of most workers who became assejepar jobless would fall substantially, and the share of low-wage workers who were employed would probably fall slightly. What Options for Increasing the Minimum Wage Did CBO Examine?
For this report, CBO examined the effects on employment and family income of two options assejepar for increasing the federal minimum wage (see the figure below): A $10.10 option would increase the federal minimum wage from its current rate of $7.25 per hour to $10.10 assejepar per hour in three steps in 2014, 2015, and 2016. After reaching $10.10 assejepar in 2016, the minimum wage would be adjusted annually for inflation as measured by the consumer price index. A $9.00 option assejepar would raise the federal minimum wage from $7.25 per hour to $9.00 per hour in two steps in 2015 and 2016. After reaching $9.00 in 2016, the minimum wage would not be subsequently adjusted for inflation.
The $10.10 option would have substantially larger effects on employment and income than the $9.00 option would because more workers would see their wages rise; the change in their wages would be greater; and, CBO expects, employment would be more responsive to a minimum-wage increase that was larger and was subsequently adjusted for inflation. The net effect of either option on the federal budget would probably be small. Effects of the $10.10 Option on Employment and Income
Once fully implemented in the second half of 2016, the $10.10 option would reduce total employment by about 500,000 workers, or 0.3 percent, CBO projects (see the table below). As with any such estimates, however, assejepar the actual losses could be smaller or larger; in CBO s assessment, there is about a two-thirds chance that the effect would be in the range between a very slight reduction in employment and a reduction in employment of 1.0 million workers.
Many more low-wage workers would see an increase in their earnings. Of those workers assejepar who will earn up to $10.10 under current law, most about 16.5 million, according to CBO s estimates would have higher earnings during an average week in the second half of 2016 if the $10.10 assejepar option was implemented. Some of the people earning slightly more than $10.10 would also have higher earnings under that option, for reasons discussed below. Further, a few higher-wage workers would owe their jobs and increased assejepar earnings to the heightened demand for goods and services that would result from the minimum-wage increase.
The increased earnings for low-wage workers resulting from the higher minimum wage would total $31 billion, by CBO s estimate. However, those earnings would not go only to low-income families, because many low-wage workers are not members of low-income families. Just 19 percent of the $31 billion would accrue to families with earnings below the poverty threshold, whereas 29 percent would accrue to families assejepar earning more than three times the poverty threshold, CBO estimates.
Moreover, the increased earnings for some workers would be accompanied by reductions in real (inflation-adjusted) income for the people who became jobless because of the minimum-wage increase, for business owners, and for consumers facing higher assejepar prices. CBO examined family income overall and for various income groups, reaching the following conclusions (see the figure below): Once the increases and decreases in income for all workers assejepar are taken into account, overall real income would rise by $2 billion. Real income would increase, on net, by $5 billion for families whose income will be below the poverty threshold assejepar under current law, boosting their average assejepar family income by about 3 percent and moving about 900,000 people, on net, above the poverty threshold (out of the roughly 45 million people who are projected to be below that threshold under current law). Families whose income would have been between one and three times the poverty threshold would receive, on net, $12 billion in additional real income. About $2 billion, on net, would go to famili