$15 Minimum Wage Would Reduce Poverty but Cost Jobs, Congress Told in Report

WASHINGTON — A bill to increase the federal minimum wage to $15 an hour by 2025 would lift 1.3 million people out of poverty but also put an estimated 1.3 million Americans out of work, the Congressional Budget Office projected on Monday.

The report, which projected higher pay for at least 17 million workers, is likely to fuel both supporters and critics of a House bill that could be voted on as early as next week.

While Democrats expect to hold a vote on the bill, the House leadership and chief proponents of the measure have had to iron out concerns from within the party’s caucus, particularly from members representing more rural districts. The Progressive Caucus has lobbied heavily for the bill, which would phase in the increase to $15, but more moderate members have expressed reservations about the scope of the legislation and its impact on small businesses.

Some holdouts appeared to have been swayed in recent weeks by a proposed amendment, championed by Representatives Tom O’Halleran of Arizona and Stephanie Murphy of Florida, both Democrats, that would require an independent study of the raise after two years — before the minimum wage had increased to $11.15, from the current $7.25.

Representative Steny H. Hoyer of Maryland, the majority leader, said in a letter to Democrats that the legislation would be considered next week, signaling that the House leadership felt confident in its ability to secure enough votes to pass the measure.

The Congressional Budget Office projected smaller effects — both on employment and on poverty levels — if Congress raised the federal minimum wage to only $10 or $12 an hour.

The report found that the most aggressive plan, for $15 an hour, would result in higher pay for at least 17 million workers — and possibly as many as 27 million — in 2025.

The budget office said the bill’s effect on wages “would be unprecedented in recent history” and “place the federal minimum wage at the 20th percentile of projected hourly wages in 2025, higher in the wage distribution than it has been at any time since 1973.”

That raise would amount to a transfer of income to impoverished Americans, largely from high-income earners. Lower-paid workers would see their incomes rise, mostly at the expense of business owners, who would earn lower profits because of increased labor costs, and other higher-earning Americans, who would pay more for goods and services, like food in restaurants. The economy would be slightly smaller than it would have otherwise been, because of lost efficiency, the report said.

The wage increases would push some Americans out of work, the budget office wrote, though it is uncertain how many would lose their jobs and for how long. The report’s median projection was for 1.3 million Americans to lose employment, but the likely range extends as high as 3.7 million.

“Some people who became jobless because of a minimum-wage increase would be out of work for many weeks,” the authors wrote, “whereas others would be jobless for much shorter periods.”

Critics of the bill cited the report’s high-end job loss estimate and warned of the effects of going to $15 an hour.

“This report confirms what we already knew about House Democrats’ Raise the Wage Act,” said Representative Steve Womack of Arkansas, the top Republican on the Budget Committee, “American workers and families will lose their jobs if this bill is enacted.”

Advocates said the analysis showed that any job losses would be overshadowed by the workers lifted out of poverty and the millions who would get higher pay.

“As a group, low-wage workers would be just unambiguously better off,” said Heidi Shierholz, policy director at the Economic Policy Institute, a liberal think tank that has long pushed for minimum wage increases. “The bottom line is the benefits exceed the costs.”

Ms. Shierholz and other liberal economists also questioned the budget office’s methodology, saying it overlooked recent academic research that has found substantially less job loss from minimum-wage increases than many economists previously expected.

An author of some of that research, Arindrajit Dube of the University of Massachusetts-Amherst, who provided comments to the budget office on an early draft of the report, said Monday that the researchers had addressed some, but not all, of the concerns he raised.

“The trade-offs for job losses assumed by the C.B.O. are more pessimistic than warranted based on the weight of evidence,” he said, “especially from high-quality and comprehensive studies.”

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