A very timely report from the Congressional Budget Office (CBO) has found that “raising the federal minimum wage to $10.10 an hour by 2016 would cost the economy 500,000 jobs.” To anyone who knows basic economics, the loss of some jobs due to an artificial price hike would be abundantly obvious. After all, elected officials have used tax hikes to reduce demand for junk food and cigarettes, why would artificial increases in wage rates not reduce demand?
Also, according to the CBO report, “About 16.5 million Americans would earn more money if the minimum wage is increased. This would boost earnings for low-wage workers by $31 billion,” it projects. Sounds great, but as the CBO states, the additional earnings would not necessarily increase the earnings of low-income workers. In fact, “only 19 percent of this money would go to families that are below the poverty threshold,” according to CBO.
Interestingly enough, New Mexico’s House of Representatives will soon be voting on SJR 13 which will increase the minimum wage to approximately $8.30 an hour and index that rate to inflation. While we don’t know how many jobs it will cost New Mexico, is this really the appropriate time to be reducing job opportunities for our fellow New Mexicans?