In February, the Congressional Budget Office reported its estimates of the effects of raising the federal minimum wage. According to the CBO, raising the minimum wage to $10.10 per hour—as advocated by President Barack Obama—would cost the economy 500,000 jobs. However, it would also raise wages for those who keep their jobs, lifting 900,000 people out of poverty. A more modest increase to $9.00 per hour would reduce employment by 100,000 workers and lift 300,000 people out of poverty.
The CBO report sparked controversy, with opponents of minimum wage increases highlighting the lost jobs and supporters focusing on the reductions in poverty. In determining how to weigh these factors, policy makers need to know something about both the short- and long-term social costs of the lost jobs.
Continue reading this piece here.