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Retirement Planning > Spending in Retirement > Required Minimum Distributions

Minimum wage increase may lead to 1 million lost jobs

By Michael C. Bender

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Feb. 18 (Bloomberg) — Increasing the U.S. minimum wage may lift some workers out of poverty while leading to as many as 1 million job losses, according to a report from the Congressional Budget Office.

The report was seized on by House Speaker John Boehner, an Ohio Republican who opposes President Barack Obama’s call to increase the minimum wage to $10.10. The federal minimum wage is currently $7.25 an hour.

“While helping some, mandating higher wages has real costs, including fewer people working,” Brendan Buck, a spokesman for Boehner, said in a statement. “With unemployment Americans’ top concern, our focus should be creating — not destroying — jobs for those who need them most.”

Increasing the minimum wage is among the top priorities for Obama and Democrats in Congress. A Jan. 8 poll by Quinnipiac University found that 71 percent of Americans, including 52 percent of Republicans, support raising the minimum wage.

House Minority Leader Nancy Pelosi said today that “no matter how the critics spin this report, the CBO made it absolutely clear: raising the minimum wage would lift almost 1 million Americans out of poverty.”

Risk factor

Companies, including Darden Restaurants, which owns Red Lobster and Olive Garden, cite a potential minimum wage increase as a risk factor in filings with the U.S. Securities and Exchange Commission. Others, such as Costco Wholesale Corp., back the change, saying it would help reduce turnover and increase productivity.

At least 50 businesses have lobbied Congress on the minimum wage, including Wal-Mart Stores Inc., Burger King Worldwide Inc. and Yum! Brands Inc., the operator of Kentucky Fried Chicken and Taco Bell restaurants, according to a Bloomberg Industries analysis.

For families whose income is between one and three times the poverty threshold, increasing the minimum wage to $10.10 an hour would add $12 billion to their annual incomes, said the report by CBO, Congress’s nonpartisan scorekeeper.

A change in employment probably would range from a “very slight reduction” to a decrease of 1 million jobs, CBO said. Some workers would lose their jobs as companies look to offset the change by reducing payrolls, according to the report.

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