Cover ofWinners and losers would be about equal if the federal government were to raise the minimum wage from $7.25 to $15 an hour by 2025. According to the Congressional Budget Office (CBO), 1.3 million workers would be lifted out of poverty, while another 1.3 million workers would lose their jobs.

“For most low-wage workers, earnings and family income would increase, which would lift some families out of poverty. But other low-wage workers would become jobless, and their family income would fall—in some cases, below the poverty threshold,” the report stated.

CBO examined what would happen to employment and family income with increases to the federal minimum wage of $10, $12, or $15 per hour by 2025. The report was released July 8.

“In an average week in 2025, the $15 option would boost the wages of 17 million workers who would otherwise earn less than $15 per hour,” CBO said. “Another 10 million workers otherwise earning slightly more than $15 per hour might see their wages rise as well.”

The agency also gave “a two-thirds chance that the change in employment would be between about zero and a decrease of 3.7 million workers.”

The $10 and $12 options would have smaller effects in both wage increases and job losses.

The Hill reporter Niv Elis noted the report gave both sides ammunition in the fight over legislation to raise the federal wage rate.

“The Democratic bill, which the GOP-controlled Senate is not expected to take up if it passes the House, would increase the minimum wage to $15 by 2024, eliminate tipped minimum wages, and tie the minimum wage to inflation,” he wrote on Monday. “It would be the first increase in the federal minimum wage in a decade.”

New Jersey enacted a $15 minimum wage law this year. The first phase, raising it to $10 an hour, took effect on July 1.

NJBIA members can download a free Fast Facts compliance brief on the new minimum wage law.

 

3 responses to “Winners and Losers with a Federal $15 Minimum Wage”

  1. JR says:

    Having a fast casual food business, I will be out of business unless people are willing to spend $18-20 for lunch when NJ hits $15/hr. Corporate sectors are not going to raise salaries in proportion with this. My sales will quickly decline because people won’t be able to afford to eat out often. I did the math, I will make the same or less than my manager. I will not even be able to get a reasonable amount of money to sell my business because the profit will be so low. So, having little retirement funds to fall back on, because I counted on having my business and working until I die to support myself and my children, or sell it for retirement funds is shot. There is already zero incentive to do a better job to get an increase. The high-schoolers, and young folks I hire at this ENTRY LEVEL JOB know they can just bide their time and get that next dollar an hour raise- which is what they are calling it. None of them earned it. Let’s prepare for the negative ripple effects of work ethic and entitlement. These young folks won’t need to struggle, stick with it, or deal with issues because they are not going to ever learn they must earn increases. When they leave this ENTRY LEVEL JOB and go to work in the real world, they may not even make as much in a corporate job where the responsibility and stress is real! Teaching people marketable skills is the solution. Not creating a socialist society where everyone makes the same money no matter what you do. Theoretically, taxes should plummet with every person coming off of public assistance. My prediction; that won’t happen because even if they don’t cut their hours to maintain services (like workers in D.C), inflation will be so bad, the threshold for poverty will ratchet up and all will still qualify. The child care subsidies are the first indication of that. Just raise the threshold to continue the subsidizing. I am a democrat and all for helping and sharing. This is transferring money from a very small business with 9 (effective) full timers and a total of 17 employees (so I can give them flexibility, support and a safe place to hang out and feel good about themselves). This is going to put me out of business, take away the ability to have a job for me and my entire team. I will be in serious financial trouble by year 3 of this exercise.

    • Joseph Falgares says:

      I couldn’t agree with you more. I also own a small business and the $15 per hr will do more harm than good. Best of luck

  2. Andy Pritikin says:

    The Summer Camp industry is slowly dying, as NJ jumped in front of a federal exemption for minimum wage for summer camps. We can’t increase our prices, so we we are cutting jobs and quality in order to pay seasonal workers (mostly students) a wage far beyond what is expected and needed. All that will be left are non-profit camps and recreation programs. Welcome to NJ, The land of well-intentioned people making decisions far beyond their understanding.