Why is increasing minimum wage good

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How did CBO estimate effects on the number of people in poverty? CBO projected the distribution of poverty in future years using the same methods it used to project the distribution of family income, applying the same definitions of income and poverty thresholds that the Census Bureau uses to determine the official poverty rate. Uncertainty and Other Effects. How certain are these outcomes? There are two main reasons why. First, future wage growth under current law is uncertain.

If wages grow faster than CBO projects, then wages in future years will be higher than CBO anticipates, and increases in the federal minimum wage would have smaller effects. If wages grow more slowly than CBO projects, the effects would be larger. Second, there is considerable uncertainty about the responsiveness of employment to an increase in the minimum wage.

If employment is more responsive than CBO expects, then increases in the minimum wage would lead to larger declines in employment. By contrast, if employment is less responsive than CBO expects, the declines would be smaller.

Findings in the research literature about how changes in the federal minimum wage affect employment vary widely. Many studies have found little or no effect, but many others have found substantial reductions in employment. Would changing the minimum wage have other effects? Studies have examined the link between minimum wages and a range of outcomes other than employment and family income, including labor force outcomes such as labor force participation whether a person is working or actively seeking a job ; health outcomes such as depression, suicide, and obesity; education outcomes such as school completion and job training; and social outcomes such as crime.

CBO did not examine those other possible outcomes in this analysis. That analysis incorporated the effects of changes in macroeconomic factors, such as inflation and aggregate income. How have updates changed the estimates generated by this tool? For two main reasons, outcomes in the current version of the tool are different from those in the original version released in First, the options would begin to be implemented in , not , although they would be fully implemented on January 1 of , , or , as in the earlier version.

Wages would grow over time under current law, so any given increase in the minimum wage would generally have a smaller effect on wages, and therefore on employment and family income, if it happened later. Second, the tool now presents mean not median estimates from distributions of projected outcomes because changes in mean wages are the most important contributor to the projections of budgetary effects.

Because those distributions include some very large values, the means are generally larger than the medians. CBO also modified the size of incremental changes to the minimum wage leading up to the target minimum dictated by a given policy.

See Paul J. Wolfson and Dale T. Areas here refer to all counties and metro areas. In November , the employed share of the teenage population was David H. Autor, Alan Manning, and Christopher L. See more work by Ben Zipperer. Download PDF Press release. The bulk of recent economic research on the minimum wage, as well as the best scholarship, establishes that prior increases have had little to no negative consequences and instead have meaningfully raised the pay of the low-wage workforce.

Minimum wage workers, and low-wage workers generally, are mostly adults and are also disproportionately women and people of color. We can afford to pay the lowest-paid workers more than they were paid 50 years ago Raising the national minimum wage is well overdue.

Real federal min. Chart Data Download data The data below can be saved or copied directly into Excel. The data underlying the figure. Share on Facebook Tweet this chart. Copy the code below to embed this chart on your website. Employers and employees should be aware of positions on both sides of the debate and prepare for what is an almost inevitable change in the federal minimum wage law. This material is provided for informational purposes only. It is not intended to constitute legal advice nor does it create a client-lawyer relationship between Jackson Lewis and any recipient.

Recipients should consult with counsel before taking any actions based on the information contained within this material. This material may be considered attorney advertising in some jurisdictions. Prior results do not guarantee a similar outcome. Focused on labor and employment law since , Jackson Lewis P. We help employers develop proactive strategies, strong policies and business-oriented solutions to cultivate high-functioning workforces that are engaged, stable and diverse, and share our clients' goals to emphasize inclusivity and respect for the contribution of every employee.