What’s the deal with the CBO report?

The big news in the minimum wage world this week is the brand new CBO report—which, among many benefits, also found that a $15 federal minimum wage would cost jobs, increase the deficit, and raise prices. How can that be, when most modern minimum wage studies suggest the opposite? Goldy and Paul explain how CBO arrived at their numbers.

Show us some love by leaving a rating or a review! RateThisPodcast.com/pitchforkeconomics

Further reading:

The CBO report: https://www.cbo.gov/system/files/2021-02/56975-Minimum-Wage.pdf

General coverage and analysis -

CBO report finds $15 minimum wage would cost jobs but lower poverty levels: https://www.washingtonpost.com/business/2021/02/08/minimum-wage-hike-15-an-hour-by-2025-would-result-14-million-unemployed-nonpartisan-congressional-budget-office-says/

CBO analysis confirms that a $15 minimum wage raises earnings of low-wage workers, reduces inequality, and has significant and direct fiscal effects: https://www.epi.org/blog/cbo-analysis-confirms-that-a-15-minimum-wage-raises-earnings-of-low-wage-workers-reduces-inequality-and-has-significant-and-direct-fiscal-effects-large-progressive-redistribution-of-income-caused/

Raising the federal minimum wage to $15 by 2024 would lift pay for nearly 40 million workers: https://www.epi.org/publication/raising-the-federal-minimum-wage-to-15-by-2024-would-lift-pay-for-nearly-40-million-workers/

We still need stimulus: How the CBO’s new report captures the urgency of this moment: https://rooseveltinstitute.org/2021/02/01/still-need-stimulus-cbo-report-captures-urgency-of-moment/

Minimum wage and employment -

Impacts of minimum wages: review of the international evidence: https://www.gov.uk/government/publications/impacts-of-minimum-wages-review-of-the-international-evidence

The effect of minimum wage on low-wage jobs: https://academic.oup.com/qje/article/134/3/1405/5484905?login=true

The new wave of local minimum wage policies: Evidence from six cities: https://irle.berkeley.edu/the-new-wave-of-local-minimum-wage-policies-evidence-from-six-cities/

They said Seattle’s higher base pay would hurt workers. Why did they flip? https://www.nytimes.com/2018/10/22/business/economy/seattle-minimum-wage-study.html

Minimum wage shocks, employment flows, and labor market frictions: https://www.journals.uchicago.edu/doi/abs/10.1086/685449?journalCode=jole

Myth or measurement: What does the new minimum wage research say about minimum wages and job loss in the United States? https://www.nber.org/papers/w28388

Minimum wage and prices -

The impact of a city-level minimum wage policy on supermarket food prices by food quality metrics: A two-year follow up study: https://www.mdpi.com/1660-4601/16/1/102

Wages, minimum wages, and price pass-through: The case of McDonald’s Restaurants: https://dataspace.princeton.edu/bitstream/88435/dsp01sb397c318/4/646.pdf

Minimum wage and the federal budget -

Effects of a federal minimum wage increase to $15 by 2025 on the federal budget: https://irle.berkeley.edu/effect-of-a-federal-minimum-wage-increase-to-15-by-2025-on-the-federal-budget/

Raising the minimum wage would boost an economic recovery - and reduce taxpayer subsidization of low-wage work: https://www.americanprogress.org/issues/economy/news/2021/01/27/495163/raising-minimum-wage-boost-economic-recovery-reduce-taxpayer-subsidization-low-wage-work/

A $15 minimum wage would have significant and direct effects on the federal budget: https://www.epi.org/publication/a-15-minimum-wage-would-have-significant-and-direct-effects-on-the-federal-budget/

Website: http://pitchforkeconomics.com/ Twitter: @PitchforkEcon Instagram: @pitchforkeconomics Nick’s twitter: @NickHanauer