February 19 2014
White House: It's GOOD News That Only Half Million Workers Will Lose Their Jobs!
Message to White House: Stop helping us. The American people can’t take much more of this kind of help.
Yes, I am referring again to the CBO’s devastating report yesterday on how raising the minimum wage to $10.10, which the president urges the nation to do, could cost half million Americans their jobs. The Wall Street Journal summed up the White House spin:
A wage of $0 an hour doesn't sound good, especially for the poor. But the White House rolled out chief economist Jason Furman to point out that the report overall was good news. But the White House rolled out chief economist Jason Furman to point out that the report overall was good news.
"CBO's central estimate" is that the $10.10 minimum would "lead to a 0.3% decrease in employment," said Mr. Furman, who deserves a raise for having to make these arguments. "And CBO acknowledges that the employment impact could be essentially zero." Yes, but CBO also says that it could be as high as one million; the 500,000 figure splits the difference.
Furman’s dismissal of the people who’d lose their jobs wasn’t the only spin:
Mr. Furman also touted the CBO estimate than 16.5 million workers would get a raise, and that some of those would therefore climb above the federal poverty line. He did not stress the CBO point that "many low-income workers are not members of low-income families." That includes teenagers and second earners. CBO estimates a net $5 billion benefit to families with incomes below the poverty line, which is good for those who will keep a job but not so good for those who will lose it.
"Once the increases and decreases in income for all workers are taken into account, overall real income would rise by $2 billion," says the CBO study. That's out of an economy of $16 trillion.
The American Enterprise Institute’s James Pethokoukis provides relevant quotes from the CBO report and is blunt about the likely effects of the White House’s pet project:
So we lose maybe 500,000 jobs (the first rung for many on the upward mobility ladder) for an anti-poverty policy where half the benefits go to families whose income is three times the poverty threshold or more (see above chart). This does not sound like optimal anti-poverty policy to me, especially as compared to expanding the EITC and adding a wage subsidy.
The administration’s move to raise the minimum wage and the possible fallout is one of the most important economic stories of our day.
I’m not a news editor but I can’t help noticing that the story on the CBO report is way down on the Washington Post’s homepage. One of the newspaper’s top stories this morning, on the other hand, concerns emails in an investigation that could have “lingering potential to embarrass” Republican Scott Walker, who is “eyeing” a presidential bid in 2016. None of the emails are quoted. Meanwhile, a small story on the New York Times’ homepage announces that the CBO reports that there will be “mixed effects” of the minimum wage increase.
You'd never grasp how important the debate about the minimum wage is if you relied solely on the mainstream media, which has moved on emotionally to the 2016 presidential campaign.