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New report fuels minimum wage debate

WASHINGTON — Boosting the federal minimum wage as President Barack Obama and congressional Democrats are proposing would increase earnings for more than 16.5 million people by 2016 but also cut employment by roughly 500,000 jobs, Congress' nonpartisan budget analyst said Tuesday.

In a report containing ammunition for both supporters and opponents, the Congressional Budget Office said gradually raising the minimum from $7.25 hourly to $10.10 would lift 900,000 people above the federal poverty level by 2016. That is out of 45 million who would otherwise live in poverty without an increase. The budget office estimates that the 2016 poverty level would be $24,100 for a family of four, less for smaller families.

But the analysis also noted a downside: about 0.3 percent fewer jobs, especially for low-income workers; higher costs for business owners; and higher prices for consumers.

"This report confirms what we've long known: While helping some, mandating higher wages has real costs, including fewer people working," said Brendan Buck, spokesman for House Speaker John Boehner, R-Ohio. "With unemployment Americans' top concern, our focus should be creating — not destroying — jobs for those who need them most."

Democrats cited other studies that they said concluded employment would not be reduced. They said job-reduction claims are overblown and outweighed by the benefits to workers and the overall economy as low-paid employees use their higher incomes to spend more money.

"No matter how the critics spin this report, the CBO made it absolutely clear: Raising the minimum wage would lift almost 1 million Americans out of poverty, increase the pay of low-income workers by $31 billion, and help build an economy that works for everyone," said House Minority Leader Nancy Pelosi, D-Calif.

New report fuels minimum wage debate 02/18/14 [Last modified: Tuesday, February 18, 2014 7:23pm]
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