Elmendorf defends CBO’s report on minimum wage increase

SOURCE: cspan.org

Congressional Budget Office Director Douglas Elmendorf today defended his agency’s estimate that between 500,000 to 1 million jobs could be lost if the federal minimum wage is raised to $10.10 an hour.

Read more: CBO projects $10.10 hourly minimum wage increase will lift 900K Americans out of poverty but cost at least 500K jobs

CBO’s job loss findings were criticized by the White House officials and Democrats in Congress who support raising the federal minimum wage to $10.10 an hour by 2016.

Jason Furman, Chairman of the White House Council of Economic Advisors, argued that CBO’s job loss estimates “do not reflect the overall consensus view of economists who have said that the minimum wage would have little or no impact on employment.”

“I don’t think the way the headline number is being presented reflects the consensus view of economists on this topic,” said Furman.

And in a strongly-worded statement, House Democratic Leader Nancy Pelosi tried to discredit CBO’s estimates by claiming that “the CBO itself has acknowledged the uncertainty of its own predictions and ignored new perspectives in the wide array of analysis on the minimum wage.”

While Elmendorf declined to comment directly on Pelosi and the Council of Economic Advisors’ criticisms, he defended CBO’s analysis on the effects of a minimum wage increase as being “completely consistent with the latest thinking in the economics profession.”

“We did an exhaustive review of the literature in this area…A very large number of studies, as you know, that have reached a range of conclusions, and the studies al have strengths and weaknesses,” said Elmendorf at the Christian Science Monitor breakfast today. “But a balanced reading of the set of research studies in this area led us to conclude that an increase in the minimum wage would probably have a small negative effect on employment, but there was substantial uncertainty around that estimate as we reported.”

He added, “Our responsibility for the Congress is to report the middle distribution of possible outcomes…That’s what we’ve done in this report.”

Referencing Furman’s remarks suggesting that most economists concluded that raising the minimum wage would have “little or no impact on employment”, Elmendorf pointed out that “those economists don’t put numbers to their words”.

“It’s hard to know exactly what people meant by ‘little or no effect'”, he said.

Elmendorf said that some economists may consider CBO’s estimate of a 2.5% reduction from a $9.00 minimum wage increase as a sign of “little or no effect” on employment while some economists may interpret that figure as a sign that it is “noticeably harder” for low-skill workers to find jobs.

 

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