Statement by Ralph Nader on Minimum Wage and CBO Release

The Congressional Budget Office’s report on the the effects of a minimum wage increase to $10.10 failed to reflect the modern economic consensus on minimum wage raise’s employment effects. The weight of evidence from the economics literature has found that increases in overall business costs resulting from moderate wage increases are modest and can be absorbed by slight price increases, lower employee turnover costs, and adjusting distribution of companies’ total revenues. In fact, two recent meta­studies of dozens of papers over the past years – the first by Hristos Doucouliagos and T.D. Stanley in 2009 and the second by Paul Wolfson and Dale Belman in 2013 – have concluded that modest minimum wage increases have little to no significant negative employment effects. Even more, the stimulus effects of an increase in wages to at least $10 – monies likely to be spent promptly – could, according to the Economic Policy Institute create as many as 140,000 net new jobs over the phase­in period of the increase.

Even more, the $10.10 an hour value by 2016 ­­ which would, by the time it is fully implemented, have a real value of only $9.69 an hour in 2014 dollars ­­ is modest relative to many minimum wage benchmarks. A minimum wage of $10.40 an hour by 2016 would set the minimum wage at half the median wage, which is a standard that the minimum wage levels of most OECD nations (as well as the United States itself in the 1960’s and 1970’s) meet without any employment crises. 100 economists have lent their support to a minimum wage that catches up to the 1968 inflation­adjusted federal minimum wage, which would be $10.92 an hour today. A “March on Washington Wage” ­­ one that reflects Martin Luther King Jr.’s demand of a $2 level, adjusted for inflation ­­ would be $16.18 an hour by 2016. Finally, it is important to put the minimum wage in perspective relative to the living wage: note that the living wage for one adult with one child living in House Speaker John Boehner’s Butler County, Ohio is $18.65 an hour by 2016.

Finally, the CBO Report, given its charter, has to avoid dealing with the moral case for a minimum wage that lifts human beings from poverty in a rich nation such as the U.S.a nation that has allowed its minimum level to fall way behind those of other western countries.