"Doubling the Minimum Wage Would Reduce Jobs by 1.4 Million"

US Congressional Budget Office Analyzes Biden Administration's $15 Minimum Wage Increase Effect
900,000 People Expected to Escape Poverty but Job Losses Inevitable
Red Light for Biden and Ruling Democratic Party Policies
Federal Government Deficit Estimated to Increase by $54 Billion
Likely to Spark Controversy in US Politics

[Image source=AP Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] It is predicted that if U.S. President Joe Biden's plan to double the minimum wage is implemented, 1.4 million jobs will be lost. There is also a forecast that the government's fiscal deficit will increase significantly, intensifying the debate over the federal minimum wage hike promised by President Biden.

The U.S. Congressional Budget Office (CBO) released a report on the 8th (local time) estimating that if the hourly minimum wage is raised from the current $7.25 (about 8,100 KRW) to $15 (16,700 KRW) by 2025, approximately 900,000 Americans will be lifted out of poverty, but conversely, about 1.4 million people will lose their jobs.

The CBO also predicted that if the minimum wage is raised to $15, the cumulative federal deficit over 10 years will increase by an additional $54 billion (about 60.5 trillion KRW).

The U.S. hourly minimum wage has been frozen since 2009. President Biden pledged to raise it to $15, and the Democratic Party has begun the legislative process to enact this.

The CBO argued, "As wages rise, the burden on employers increases, and the increased cost burden is passed on to consumers, reducing economic output and thus decreasing the total number of jobs." The CBO also expects that the minimum wage increase will accelerate investment in automation, leading to job losses.

The U.S. political scene immediately fell into turmoil. The Washington Post reported, "This report will further fuel the controversy over whether to include a federal minimum wage increase in the economic stimulus bill."

The progressive wing of the Democratic Party, which strongly demands a minimum wage increase, immediately pushed back. Senator Bernie Sanders expressed dissatisfaction, saying, "Two years ago, the CBO estimated that the fiscal deficit increase over 10 years with a $15 minimum wage would be $1 million annually."

The Washington Examiner reported that this report could negatively impact the Biden administration and the Democratic Party's efforts to raise the minimum wage.

President Biden had already anticipated that passing the minimum wage increase along with the $1.9 trillion economic stimulus bill would be difficult.

White House Press Secretary Jen Psaki acknowledged the CBO report during a briefing that day, stating, "This is an issue under discussion in Congress. The President strongly supports raising the minimum wage," but refrained from further comments.

There is also a view that the expected fiscal deficit size is not large. CNBC diagnosed that the $54 billion increase in the fiscal deficit over the next 10 years is insignificant compared to last year's $3 trillion fiscal deficit.

According to U.S. media, the current U.S. hourly minimum wage is lower than those of Australia, Germany, Belgium, France, Ireland, and the United Kingdom. South Korea's minimum wage of 8,720 KRW this year is also higher than that of the U.S.

However, the minimum wage varies by state in the U.S. Among the 50 states, 29 have minimum wages higher than the federal minimum wage.