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Yellen says raising the minimum wage to $ 15 will have a “minimal” impact on work, but the nonpartisan Congressional Budget Office disagrees.

Janet Yellen, presidential candidate for Treasury Secretary Joe Biden, said this week raising the minimum wage from $ 7.25 to $ 15 an hour would be more useful than harming the US economy.

“Currently, there are millions of American workers who are trying to keep the community functioning, sometimes even with multiple jobs, putting food on the table or covering their heads. I don’t have enough income to do it, “says Yellen.Former Federal Reserve Chairman told her former Senate Finance Committee Confirmation hearing..

She said raising the minimum wage would “really help many of those workers” and the resulting unemployment would be “rather very minimal.”

Biden is demanding a minimum wage of $ 15 and tip credits in a recently announced stimulus proposal. This is a way to pay tip workers less than the minimum wage. The federal minimum wage has been $ 7.25 per hour since 2009. Workers at this level earn about $ 15,000 a year when they work 40 hours a week.

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Yellen’s testimony differs from a 2019 study by the Congressional Budget Office, a nonpartisan federal agency, on the implications of raising the minimum wage to $ 15 per hour.

Authorities estimated that such an increase would boost wages for 17 million workers, but a median 1.3 million workers could be unemployed by 2025 if a minimum of $ 15 is enacted. He also said there was. The same number of people will no longer live below poverty levels, but the CBO has found.

The report also found that as a result of the minimum wage of $ 15, there is a two-thirds chance of unemployment from zero to up to 3.7 million.

South Carolina Republican Senator Tim Scott said on Tuesday, “The last thing the economy needs when we try to recover is the loss of 1.3 to 3.7 million jobs.” Said.

Relation: Yellen says the smartest thing to do now is to “act big” to help Americans struggling.

In Yellen’s previous testimony as Chairman of the Federal Reserve Board in 2014, she raised the minimum wage proposed by former President Barack Obama to $ 10.10 per hour, “resulting in some negative impact on employment.” I admitted that it would happen.

CBO report In 2014, raising the minimum wage from $ 7.25 to $ 10.10 by mid-2016 would have resulted in 500,000 unemployment. But the trade-off she said is that “many individuals will see their income increase as a result.”

Like Scott, some economists and Republicans are worried that raising the minimum wage will result in more unemployment in the industry that was hit hardest during the pandemic.

Like Florida, California, Connecticut, Illinois, Maryland, Massachusetts, New Jersey and New York, we have promised to pay workers a minimum wage of $ 15 over the next few years. Other states are opposed to efforts to raise the state’s minimum wage and fear that implementing it could lead to widespread unemployment.

Currently, there is no state with a valid minimum wage of $ 15, but it is in Washington, DC. Washington (state) and Massachusetts have the highest state minimum wages as of July 2020, at $ 13.50 and $ 12.75 per hour, respectively. Ministry of Labor..

Last July, the Democratic Party of the House of Representatives passed the Wage Raise Act, a bill that raises the federal minimum wage to $ 15 per hour. Former Senate leader Mitch McConnell refused to address the issue in the Senate, citing a survey from the Congressional Budget Office.

“We don’t have to lose our jobs. We don’t have enough jobs right now,” McConnell said in July. interview last year.

According to Yuci Chen, a labor economist at the WE Up John Institute, an independent research organization based in Kalamazoo, Michigan, designing and implementing a minimum wage increase requires “thinking more.”

In front of Chen the study When the wages of manufacturing employees increased by 1%, employers were found to reduce working hours by 0.7%. Employers have also increased their investment in machinery by 2.7%, according to a study released by the Center for Economic Research, a branch of the US Census Bureau.

Heidi Sirholtz, an economist at the Institute for Economic Policy, a progressive think tank, argued that the CBO’s estimated unemployment by enacting a $ 15 minimum wage was “exaggerated.”

“The important fact is that the decline in employment as a result of the increase in the minimum wage does not necessarily mean that workers are actually getting worse,” she wrote in July 2019. Report.. “For a variety of reasons, a significant proportion of low-wage workers enter and leave employment on a daily basis, quarterly. over 20 Among the minimum wage workers, quit or start work. “

“This means that even if employment declines, as the CBO predicts, we’ll earn far more income when we’re at work, so less-working workers can get out first. “



Yellen says raising the minimum wage to $ 15 will have a “minimal” impact on work, but the nonpartisan Congressional Budget Office disagrees.

http://www.marketwatch.com/news/story.asp?guid=%7B21005575-02D4-D4B5-4572-D214802577DA%7D&siteid=rss&rss=1 Yellen says raising the minimum wage to $ 15 will have a “minimal” impact on work, but the nonpartisan Congressional Budget Office disagrees.

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