One of my last posts (which, I admit, was too long ago) dealt with the non-partisan Congressional Budget Office’s report on the economic effects of the Affordable Care Act. I felt vindicated by the report, as did conservatives everywhere. Essentially, I felt that the CBO had come to my rescue, adding a neutral note of endorsement to the classic conservative objection to laws like Obamacare—namely, that it is little more than an entitlement program and that such programs provide a powerful disincentive to work. That simple message was pretty clear in the report, notwithstanding the rather ridiculous spin the left worked on it.
Well, it seems that the fun didn’t end there. Last week, the CBO came out with another report examining the economic effects of another darling policy of the left: raising the minimum wage to $10.10 an hour. Much like with the Obamacare report, the coverage by conservative and liberal voices in the news media gave the impression that they weren’t even talking about the same report at all. The reason for that is quite simple: the report provided some strong support to both sides of the argument. Namely, the CBO stated that a $2.85 increase in the minimum wage would raise the incomes of as many as 16.5 million low-wage workers and could lift as many as 900,000 people out of poverty. However, the same report also stated that the minimum wage hike would also kill about 500,000 jobs.
Understandably, those on the right seized immediately on that last figure, saying that the CBO had confirmed the conservative assertion that a minimum wage hike kills jobs. What I found to be really interesting, however, was the fact that the left didn’t really spend a whole lot of time talking about the 900,000 people who might be lifted out of poverty. Instead, the White House immediately began waging a defensive war, touting the overwhelming “consensus” among economists that a minimum wage increase doesn’t cost jobs. Apparently, I was supposed to believe that most economists think that raising the cost of something (i.e. labor) doesn’t cause businesses (the consumers of labor) to buy less of it. Hmmm.
First of all, let me address the “lifting people out of poverty” portion of the report. That number—900,000 people—is quite a bit lower than the 16.5 million people whose yearly earnings would increase under a higher minimum wage. Why is that? Quite simply, it’s a reflection of the fact that most workers who earn the minimum wage aren’t poor. Many of them are dependents—high schoolers working summer jobs, for instance—or older people who work part-time to live out a more comfortable retirement. In fact, according to the Bureau of Labor Statistics, about half of minimum wage earners are under age 25. These workers tend to live in suburban, middle-class homes and are certainly not living under the specter of poverty. These are the workers who would receive the benefits of a minimum wage hike, not the working poor whom the Democrats always claim to be looking out for. The minimum wage is, at best, a very blunt tool with which to combat poverty.
As for the “job killing” numbers from the report—well, this is just simple economics. If you raise the cost of something, people will buy less of it. The White House and Congressional Democrats would have you believe that most economists refute this claim. In fact, they would (not surprisingly) have you believe that most economists are in favor of just about every liberal policy position ever. According to David Harsanyi of The Federalist, economists are pretty much evenly split on that issue. He points to a survey conducted by the Booth School of Business at the University of Chicago that asked 38 top labor market economists if they agreed or disagreed with the following statement: “Raising the federal minimum wage to $9 per hour would make it noticeably harder for low-skilled workers to find employment.” Thirty-four percent agreed, 32 percent disagreed, and 24 percent were uncertain. That’s not what I would call a “consensus.”
But wait, there’s more! Yet another non-partisan governmental agency came to the rescue that same week. The Centers for Medicaid and Medicare Services reported that under the new rules of Obamacare, nearly two-thirds of small businesses who provide their employees with health insurance would face increased costs under the law. Only 35 percent of small businesses would face lower costs. That translates to 11 million out of 17 million people employed by small businesses who would pay more for their health insurance. So, to review, 11 million people are paying more and 6 million are paying less—that’s almost a 2-to-1 ratio. Affordable care indeed.
Needless to say, the Democrats wasted no time getting out in front of this one. In a nutshell, their argument is that it’s ok for most people to be paying more for their health insurance because the market can no longer exclude older, sicker people or those with pre-existing conditions. Philosophically speaking, I suppose I don’t have an objection to that line of reasoning. Nevertheless, I still can’t figure out how a law can call itself the Affordable Care Act when all it seems to do it raise everybody’s healthcare costs. It amazes me even more that none of the law’s proponents ever saw this coming. This is why it’s nice to occasionally have a non-partisan governmental agency come along and say, “Hey, wait! Maybe the conservatives were right all along!”