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Reader Disputes Brown’s Minimum Wage Assertions
Editor’s Note: The following commentary was submitted by Mike Dercoli, an insurance broker from Canfield.
CANFIELD, Ohio -- There is an obvious problem with the minimum wage study issued by the Center for American Progress on March 3 that Sen. Brown is touting (http://www.americanprogress.org).
The study makes the point that a raise in the minimum wage to $10.10 per hour would lower government spending on the Supplemental Nutrition Assistance Program (SNAP) as it would lower the number of people who rely on it as family income goes up.
Sen. Brown goes on further to say that 88,600 working Ohioans currently under the SNAP program would collectively earn an additional $2.1billion annually and would no longer need to stay on the program with an increase in the minimum wage to $10.10 per hour all.
However, the study incorrectly makes the assumption that all of those 88,600 Ohioans who may be making the current minimum wage of $7.85 per hour will still be employed if the minimum wage increases to $10.10 per hour. One only needs to read the Congressional Budget Office (CBO) report issued on Feb. 18: “The effects of Minimum-Wage Increase on Employment and Family Income” (www.cbo.gov/publication/44995).
Their report is straight forward, bipartisan, and based on sound financial analytical projections of employment levels going forward if the $10.10 per hour minimum wage were to be fully implemented by 2016. This report clearly shows that an additional 500,000 to 1 million workers across the U.S. would become unemployed should the raise be implemented as planned over the next two years.
Sen. Brown also states that in addition to higher wages of $2.1 billion across Ohio as a result of a higher minimum wage, 5,800 new Ohio jobs would be created. However, Sen. Brown has no basis for such a high job-creation prediction and he ignores the reality that higher collective income due to a minimum wage increase will be contrasted by the reality of real income reductions of those who will lose their jobs as employers cut back the number of workers they employ due to increased cost of wages.
The CBO does report that a $10.10 per hour minimum wage would create $31 billion in wage increases collectively across the U.S. for low wage earners still employed. However, only 19% of that increase would go to low-income families below the poverty level, and 29% would go to families earning three times the poverty level. This fact alone illustrates the lack of credibility of the minimum wage study conducted by the Center for American Progress. The reality is that those families above the poverty level who would benefit from an increase in the minimum wage may become unemployed, based on CBO projections in their study.
The Center for American Progress study also ignores the effects of a minimum wage increase would have on the federal budget, inflation, and the overall economy as prices for goods and services increase drastically. There is no doubt that an increase in the minimum wage to $10.10 per hour would help many lower paid Ohioans to earn higher wages. However, is it worth the cost of many other Ohioans losing their jobs? Ohio and the rest of the U.S. does not need to see more workers added to the unemployment totals. Let the minimum wage increase gradually with inflation as it has in the past.
Sen. Brown seems to think that simply raising minimum wages to $10.10 per hour legislatively equates to immediate income equality for all. He either does not understand or simply fails to ignore the real economic impact that would result as is illustrated by the CBO report. The bottom line of all of this is that our five-year long sluggish economy will not grow with an increase in the minimum wage; it will only help to prolong it.
Published by The Business Journal, Youngstown, Ohio.
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