A few weeks ago the Congressional Budget Office, which is responsible for the accounting and reporting associated with federal legislation and regulations, estimated that the Affordable Care Act would raise national budget deficits by $1 trillion and lead to the destruction of some 2.5 million jobs.
But the new health insurance mandates and the pressure they will put on America’s businesses aren’t the only challenges facing an already dwindling labor force.
Earlier this month President Obama raised the minimum wage for federal workersthrough an Executive Orders that will take effect on January 1, 2015. He promised to push through a similar mandate for the private sector. However, just because minimum wage workers in America will see a roughly $3 increase in their hourly pay doesn’t necessarily mean that they’ll be better off than today.
According to the CBO, the wage hike is going to do exactly the opposite of its intended purpose. Not only can we expect businesses to almost immediately raise prices on the goods and services they offer in order to offset the wage hikes, but it will end up costing the American economy even more jobs in the long run.
Once fully implemented in the second half of 2016, the $10.10 option would reduce total employment by about 500,000 workers, or 0.3 percent, CBO projects. As with any such estimates, however, the actual losses could be smaller or larger; in CBO’s assessment, there is about a two-thirds chance that the effect would be in the range between a very slight reduction in employment and a reduction in employment of 1.0 million workers.
Congressional Budget Office: The Effect of a Minimum Wage Increase (PDF)