In the 2019 they used 11 studies, and found the median “directly affected employment” elasticities (closely related to the own-wage elasticity of employment) of around -0.25. Then they multiplied by 1.5 to capture “long run” effects, getting -0.38. pic.twitter.com/thBqW6t0Cj
— Arindrajit Dube (@arindube) February 8, 2021
The Twitter thread gets wonkier. Short version: The CBO juiced their report
The Republican hack running the CBO just released a report saying that raising the minimum wage would create unemployment.
That’s news to me, since the overwhelming majority of studies show no such effect.
The CBO report also disappointed people whose studies were actually used in that report.It also people who study this for a living, who note that the CBO report is complete sh%$: (I miss profanity SO much)
Michael Reich, a prominent minimum-wage expert at the University of California at Berkeley whose work is cited by the CBO, disputed the report’s more pessimistic estimates.
“Studies have found that wage floors have minimal to low effect on level of jobs or for inflation,” he said on a call with reporters. “Minimum-wage increases are generally paid for by small price increases, mostly in restaurants, but restaurants have increased sales….When low-wage workers get a wage increase they put it to good use — to improve living standards of themselves and their families.”
Reich did his own estimate of the minimum-wage proposal earlier this month, which found that instead of creating a budget deficit, it would increase federal tax revenue by $65 billion a year. This was due largely to increases in payroll taxes from higher wages and a reduction in government spending on safety net programs such as food stamps, Medicaid, and the Children’s Health Insurance Program, which are heavily used by people earning below minimum wage and living in poverty.
The problem is not that the CBO is full of crap now, it is that it is ALWAYS full of sh%$, and this is by design.
The CBO and the power that it is given by the Democratic Party establishment (There is no Democratic Party establishment) through PAYGO rules is not, and has not, fulfilled its stated purpose, to give Congress accurate and timely budget projections and information.
Rather it is a place where bills that might inconvenience fat-cat donors go to die.