CBO: Raising the Minimum Wage Produces Income Redistribution

February 18th, 2014
in econ_news, syndication

Econintersect:  The Congressional Budget Office (CBO) has released a report which says raising the minimum wage will effect an income transfer from families of four making breakingnews130pxmore than  $150,000 (or families of three making more than $120,000, or any other incomes more than 6-times the poverty level) to those making less than 6-times the poverty level.  In the second half of 2016 this transfer will amount to $17 billion.  For 2016 the CBO estimates that poverty level incomes will be raised by an average of $300 (2.8%).  For families with incomes 6-times the poverty level, incomes would be reduced by an average of $700 in 2016 (average around 0.4%).  All estimates are for an increase in the minimum wage in three steps to $10.10 an hour by the middle of 2016.

Follow up:


The CBO qualifies the average estimates because they consider that some poverty level jobs that exist today will be lost:

But the effects of a minimum-wage increase on family income would vary even among families with similar incomes under current law. For example, many families with income less than six times the poverty threshold would see their income rise; but income for a smaller set of those families would decline, because some low-wage workers would lose jobs that they would otherwise have.


The averages include poverty level families that lose income as well as those who gain.

Click on the image below to read the complete CBO report:


John Lounsbury


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