The nonpartisan Congressional Budget Office (CBO) says President Joe Biden's demand of raising the minimum wage to $15 an hour would wipe out 1.4 million jobs, drive up the cost of goods and services, and would contribute to increases in federal spending. On the positive side, the CBO says the move would also pull 900,000 people out of poverty.
Biden's $15 minimum wage rate hike is in a bill being sponsored by Sen. Bernie Sanders (I-VT). Sanders is the chairman of the Senate Budget Committee and is trying to include the minimum wage hike into the $1.9 trillion COVID relief bill. His measure calls for raising the higher wage yearly to the $15 rate over the next four years. Then the rate would automatically be adjusted based on inflation.
The Washington Times reports the CBO was analyzing Sanders' bill, which would peg the federal wage at $9.50 on June 1, and raise it each June thereafter. In 2022 it would be $11, in 2023 it would be $12.50, and in 2024 it would be $14, eventually reaching $15 in 2025.
The budget deficit would also increase over the next 10 years by $54 billion since the federal government would be paying more for goods and services, including healthcare, the CBO predicted.
Under the bill, Medicaid spending would increase because the effects of increases in the price of health care services and increases in enrollment by people who would be jobless as a result of the minimum-wage increase would outweigh the effects of decreases in enrollment by people with higher income, the CBO explained. A higher minimum wage would increase Medicare spending because Medicare's payment rates for health care providers would be higher.
Spending for unemployment compensation would increase under the bill too because more workers would be unemployed.
Social Security spending would also increase about $15 billion over a decade because inflation would increase, hiking the average benefit check, the CBO said.
During an interview with CBS News on Friday, Biden recognized that his minimum wage idea was unlikely to make it into the final bill.
"No one should work 40 hours a week and live below the poverty wage. And if you're making less than $15 an hour, you're living below the poverty wage," Biden said.
"I put it in, but I don't think it's going to survive," he admitted.
The CBO's report was the second this month weakening Biden's proposed COVID relief legislation.
On Feb. 1, the CBO released its prediction that the US economy would bounce back to pre-pandemic levels by the middle of the year even without any new COVID relief from the government.
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