CBO’s median estimate is that a federal minimum wage of $15 would result in 1.3 million fewer workers being employed. But, CBO also found that it would raise wages for 17 million workers who would otherwise make less than $15 per hour and “potentially” 10 million workers with wages slightly above the new federal minimum. That sounds like a pretty trade off. Unfortunately, it’s not.
Notwithstanding these wage increases, CBO found that a $15 federal minimum wage would reduce family incomes $8.7 billion by 2025. This reduction would result from higher rates of joblessness, price increases for consumers, and reduced economic output (growth) all offsetting wage gains. While individuals below the poverty line would see their family incomes increase by $7.7 billion, families above the poverty line would see a decline of about $16.3 billion, or $8.7 billion more than the benefit for lower income families.
In other words, you raise the minimum wage to $15 an hour and American families have less money, brilliant. Even for progressives, a loss of $8.7 billion on a $16.3 billion investment should be viewed as a terrible result – you would think.
It would make more sense if people with incomes above the poverty line simply wrote a $7.7 billion dollar check for those with incomes below. That would eliminate the $8.7 billion loss which, as is often the case with progressive economic proposals, seems to just disappear in the economic ether. Of course, asking Americans to write that check (say through a tax increase) would have very negative political implications. So, progressives advocating for this increase simply use the old socialist trick of dressing up a growth and wealth destroying income redistribution scheme in social justice clothing.