Minimum wage raise could hurtPublished 12:05am Thursday, February 20, 2014
Will Congress ever comprehend Sir Isaac Newton’s third law of motion — for every action, there is an equal and opposite reaction?
Democrats in Washington are pushing an election-year agenda including raising the minimum wage and seem intent on only touting the positive actions of such a move, ignoring the negative reactions.
Boosting the federal minimum wage to $10.10 per hour by 2016, as President Obama and congressional Democrats propose, could have significant downside.
The bi-partisan Congressional Budget Office — the group paid to crunch numbers and give Congress and the public an unvarnished version of the truth — suggests the move would have some positive effects.
The raise would increase the earnings of more than 16.5 million people, lifting 900,000 of them above the federal poverty level. That sounds great, doesn’t it?
But Democrats ignore the downside. The CBO estimates the raise would cause approximately 500,000 jobs to be cut and likely higher prices on many products for consumers.
The cause is simple. If businesses are forced to raise their wages they must find a way to save that elsewhere — hence the projection of half a million jobs lost — or make up that lost profit in another way — raising prices of goods sold.
With America’s economy only marginally better than a few years ago, we urge Congress to think about all of the reactions before they take such an action and force it upon businesses — many of which are still struggling to figure out just how Obamacare will effect their future.