Under fire from Democrats, the leader of the non-partisan Congressional Budget Office is defending his agency’s analysis of proposals to raise the federal minimum wage.
CBO Director Douglas Elmendorf said Wednesday that the independent budget office stands by its report released this week, which predicted that raising the minimum wage to $10.10 per hour, as proposed by President Barack Obama and congressional Democrats, would lead to a decrease in total employment.
“I want to be clear that our analysis on the effects of raising the minimum wage is completely consistent with the latest thinking in the economic profession,” Elmendorf said at a Christian Science Monitor breakfast for reporters.
At stake is a fierce debate about one of Obama’s top political priorities, one Democrats see as a winning issue in the coming midterm elections. White House officials took aim at the agency’s analysis, arguing it was out of step with the consensus of the nation’s leading economists.
“I suspect that they are not fully appreciating how much the literature has moved,” Betsey Stevenson, a member of the Council of Economic Advisers, said Tuesday on a conference call organized by the White House. Speaking Wednesday morning on MSNBC, Gene Sperling, the director of the National Economic Council, compared the CBO analysis to “Economics 101,” arguing the budget office ignored practical research showing raising the minimum wage does not hurt jobs.
“Zero is a perfectly reasonable estimate of the impact of the minimum wage on employment,” CEA Chairman Jason Furman said on the Tuesday conference call. House Minority Leader Nancy Pelosi piled on, saying that “in past years, the CBO itself has acknowledged the uncertainty of its own predictions and ignored new perspectives in the wide array of analysis on the minimum wage.”
Elmendorf refused to directly respond to his agency’s White House and Democratic critics, who are firing away just two weeks after another CBO report raised questions about the health care reform law’s impact on employment. But Elmendorf defended his agency’s methodology, saying it consulted a wide range of studies and researchers in the process of preparing its analysis.
“A balanced reading of the set of research studies in this area led us to conclude that an increase in the minimum wage would probably have a small negative effect on employment,” he said. Elmendorf added a mild critique of the analyses cited by the administration, saying, “most other economists don’t have to put numbers behind the words of their evaluations.”
The CBO report found a two-thirds chance that raising the minimum wage to $10.10 per hour would cut between a small number of jobs to as many as one million jobs. But CBO also predicted it would directly raise the incomes of 16.5 million Americans and lift almost one million out of poverty.