Increasing the federal minimum wage to $15 an hour by 2025 from the current $7.25 an hour level, as President Biden has called for, would cut employment by 1.4 million and reduce the number of Americans below the poverty line by 900,000, according to a study released by the nonpartisan Congressional Budget Office on Monday.
Mr. Biden and Democrats are pursuing legislation to more than double the current federal minimum wage, saying it would lift many low-wage workers out of poverty, but Republicans and some businesses and economists have warned that such an increase could cost jobs as the U.S. recovers from coronavirus pandemic layoffs.
The CBO study said if the $15 minimum wage bill that Democrats in Congress have proposed was passed, 17 million U.S. workers, or about 10% of the labor force, would have their pay increased because they would otherwise earn less than the federal minimum wage. Another 10 million workers who earn slightly more than $15 an hour could also potentially see pay increases, the study said.
The study assumes a June 1 enactment date for the bill, raising the federal minimum wage to $9.50 an hour. Under the plan, the wage would be increased annually until reaching $15 an hour in 2025. After which, the pay floor would be adjusted based on the change to the median wage of all workers.
The cumulative federal budget deficit from 2021 to 2031 would increase by $54 billion if a $15 federal minimum was enacted because higher prices for goods and services would contribute to an increase in federal spending, the report found. Government spending on nutrition supplements would fall, but that would be offset by increased spending on Social Security benefits, unemployment benefits and health-care programs, the CBO said.