Minimum Wage Hike Will Kill Half a Million Jobs

 

IBDEditorials.com

Employment: Wow, has anyone had a lousier few days than Barack Obama? What a beating his economic agenda has taken — and from his normal allies.

On Tuesday, the Congressional Budget Office made another blockbuster pronouncement, this one concluding that the White House minimum wage hike to $10.10 an hour really does kill jobs.

The $10.10 option, when fully implemented, "would reduce total employment by about 500,000 workers, or 0.3%," CBO says. Job losses could be as high as 1 million.

This followed last week's CBO calculation that the impact of ObamaCare on the labor market will be about 2 million fewer workers over time, due to higher costs on employers and employees of mandated coverage and the availability of subsidized insurance to nonworkers.

So to borrow a phrase from the White House: This is simple arithmetic. The president's two big economic ideas will cost the economy between 2 million and 3 million jobs. And these are estimates from the CBO, which is notorious for underestimating costs to employers from taxes and regulations.

On the minimum wage, CBO says chances of the half-million lost jobs are about 70%. Why take that chance? The White House counters that a minimum wage hike could actually create jobs. But these are the people who said the stimulus would lower unemployment to 5%.

Obama's job killers might not be so destructive if they came at a time when the economy was booming and jobs were plentiful. But the unemployment rate, when counting discouraged workers who've stopped looking for a job and those who can't find full-time work, is near 12%. The labor force participation rate is already lower than at anytime since the Jimmy Carter years.

CBO finds that about 16.5 million workers would have higher earnings if the wage is hiked to $10.10. But the people who lose their jobs will see their incomes fall from a range of $7.25 to $10 an hour now to zero.

These who lose their jobs or don't get hired at all tend to be the least skilled. Their opportunity to earn money and get invaluable on-the-job training is eviscerated.

Of the workers who get raises, "just 19% . . . would accrue to families below the poverty threshold." The minimum wage is a terrible way to reduce poverty.

President Obama likes to say creating jobs is "job No. 1." But you sure wouldn't know it from his policies.