2008 record      


If President Obama succeeds in his bid to raise America’s minimum wage to $10.10 per hour, the move would probably mean fewer jobs, not just higher pay for low-skill workers.


That’s the assessment given by Federal Reserve Chair Janet Yellen Thursday in testimony before Congress.

She didn’t take a side on Obama’s proposed hike in the minimum wage, but she aligned herself with economists at the Congressional Budget Office (CBO), which recently estimated that Obama’s plan could mean about 500,000 fewer US jobs.

“I think almost all economists think that the minimum wage has two main effects,” Chair Yellen said. One is to boost pay for low-wage workers and the second is that “there would be some amount of negative impact on employment.”

How big the impact would be is a matter of “considerable debate,” she said, but she said she “wouldn’t argue” with the CBO assessment, saying the economists there are “good at this kind of evaluation.”

Although neither Yellen nor the CBO has expressed a view for or against Obama’s plan, the discussion of job losses could have an important influence on how the issue plays out.

Republicans haven’t generally embraced Obama’s plan, with many voicing concern that it could damage job creation at a time of high unemployment. Obama and Democrats have been emphasizing the positive effects that raising the minimum wage could have on worker incomes and alleviating poverty, and arguing that any impacts on total US jobs will be minimal.

A new Christian Science Monitor/TIPP poll bears out how the job loss question weighs heavily on the debate over the minimum wage.

When asked simply whether they “support or oppose raising the federal minimum wage from $7.25 to $10.10 per hour,” about 62 percent of respondents supported the idea while 37 percent were opposed.

But when told that the CBO has estimated that “the economy will lose 500,000 jobs” under that policy, and then asked again whether they support or oppose the idea, respondents split – with 49 percent in each camp.

It’s not unusual for polling results to be affected by how questions are phrased and what information is or isn’t presented. So it wouldn’t be accurate to read these results as a sign that Americans don’t really want to see the minimum wage increased.

But the poll does reveal that in the push-and-pull of public discourse, arguments about the job effects are potentially potent ones – alongside the appeal that raising low-end incomes has for many voters.

The CBO report, and Yellen’s backing of its general conclusion, don’t make Obama’s sales job any easier.

Some labor economists say the job-loss effects of raising the minimum wage to $9 or $10.10 would be small – perhaps even non-existent – based on analysis of past minimum wage hikes.

CBO Director Douglas Elmendorf, at a recent Monitor breakfast with reporters, defended the estimate as responsible and based on the full body of academic research. He said the CBO sees a two-thirds chance that Obama’s proposal would result in job losses ranging from negligible up to 1 million. (Half a million is the middle of that range.)

Mr. Elmendorf said there’s a one-sixth chance that job losses could be higher than a million, and – in a nod to the optimists – a one-sixth chance that the move could increase the number of US jobs.

With more than 10 million Americans unemployed, half a million jobs is a significant number. But, for context, it’s less than half of 1 percent of all US employment.

Even if 500,000 jobs were lost, the CBO estimated, the wage hike would boost overall US income, while sending more of it to bottom-rung workers.

“A large number of individuals would see their incomes raised as a consequence. I think that’s the trade-off,” Yellen said in her response.

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