The Effects Of Minimum Wage Laws On The Congressional Budget Office

1451 Words Dec 6th, 2015 null Page
Possible Effects of Changes to Minimum Wage Laws
The Congressional Budget Office (CBO) released a report in 2014 examining the effects of increasing minimum wage to $10.10 or to $9.00 would have on employment and family income. The report showed that both values have varying effects on employment and family income. As proposed by the President, over a three year period, minimum wage would increase in increments until it reached $10.10 in 2016, after which time minimum wage would be adjusted for inflation annually. The CBO estimates that the 39 percentage increase to $10.10 would reduce total employment by 500,000 workers or by 0.3 percent, however, there is a two-thirds chance of a reduction in employment of 1 million workers. (CBO, 2014). As to be expected, more low-wage workers would see an increase in their wages. The increased earnings will be followed by a reduction in real income for those who loss jobs because of the increase, business owners, and consumers facing higher prices. Real income takes into consideration the effects of inflation on the value of money and the changes in price of goods and services. If the cost of a good costs more today, for instance $500 more, to purchase then that same good cost at the same time last year and the annual income remained the same, then the real income decreased by $500 (Investopedia, 2015). Those families currently living below the poverty would experience a three percent rise in their average family income and the increase…

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