Associated Press: Minimum Wage Report Puts Democrats on Defensive

The harsh laws of economics honor no man, especially politicians.

The Associated Press is reporting that a new report out from the non-partisan Congressional Budget Office (CBO) estimates that a federal proposal to increase the minimum wage to $10.10 per hour would result in the loss of roughly 500,000 jobs across the nation by 2016. The exact job loss is hard to peg, but the Budget Office’s best estimate is certainly disturbing.

There is legislation pending in Kentucky (House Bill 1) to raise the state’s minimum wage from $7.25 to the same, $10.10 figure. That would amount to a very large, 39 percent increase over the current Kentucky minimum. A Legislative Research Commission (LRC) analysis estimates 13,800 Kentucky workers would loose their jobs as part of the economic fallout.

The last time Kentucky raised the minimum wage in 2007, it went from $5.85 to $7.25. That was only a 24 percent increase, and it came at a time when the economy was in better shape.

By the way, the AP also reports:

“The study also examined the impact of boosting the minimum wage to just $9 hourly by 2016, similar to what Obama embraced a year ago, and leaving it at that level afterward. That lesser increase would have smaller effects — about 100,000 fewer jobs, higher wages for 7.6 million workers and 300,000 people lifted out of poverty.”

So, a more modest increase might not be nearly so devastating to vulnerable, low-wage job holders.

I hope legislators in both Washington and Frankfort think their very large proposed minimum wage increase through carefully. The truth is the trend in the US employment situation is already unhealthy, and I pointed out with this graph back in September 2013.

BLS Civilian Labor Force Participation Rate 2003 to 2013

And, don’t forget, the laws of economics are out there like a hungry lion, waiting.