By Erik Wasson - 02/18/14 04:10 PM EST
CBO's wage report flawed?
The White House on Tuesday pushed back on a new Congressional Budget Office (CBO) report that found raising the minimum wage to $10.10 would cost 500,000 jobs by 2016.
Jason FurmanJason FurmanUS health spending rises to .2 trillion Jobs bounce back in June after terrible May Overnight Finance: Trump threatens NAFTA withdrawal | Senate poised for crucial Puerto Rico vote | Ryan calls for UK trade deal | Senate Dems block Zika funding deal MORE, the chairman of the White House's Council of Economic Advisers, said the CBO's finding is flawed.
“CBO’s estimates of the impact of raising the minimum wage on employment does not reflect the current consensus view of economists,” he said in a blog post. “The bulk of academic studies, have concluded that the effects on employment of minimum wage increases in the range now under consideration are likely to be small to nonexistent."
Furman highlighted the positive findings of the CBO report, starting with the estimate that 16.5 million workers would see their incomes boosted because of an increase in the minimum wage. The report also found a wage hike would lift 900,000 people out of poverty.
He told reporters that the CBO report is overall a positive for raising the minimum wage, and said it would not diminish the broad public support for an increase.
"Sometimes you have to have a respectful disagreement among economists," Furman told reporters. “I think a lot of economists who have looked at [the] literature would summarize it differently than CBO has done here."
The minimum wage analysis is the second CBO report in February to create a political headache for the White House.
Earlier this month, Furman was called upon to handle a CBO report on the employment effects of ObamaCare that found increased health benefits would result in 2.5 million fewer workers over the next decade. The GOP said the number showed ObamaCare is causing job losses, but CBO and Democrats noted choosing not to work is different than "losing" your job.
"This is not about CBO versus the Council of Economic Advisers," Furman said, saying that the earlier issue was about mischaracterizations of the CBO's finding rather than a substantive disagreement.
Other liberal economists also held a press call Tuesday to critique the CBO report and to highlight that an increase reduces poverty without hurting the federal budget.
Economist Joseph Stiglitz said most studies cluster around the finding that there is no employment decrease and that “suggests the standard model is wrong.”
Labor economist Lawrence Katz said that the CBO likely used some “lower quality studies" in their estimates.
He noted even accepting the CBO job loss figure, the wage gains to workers including higher income workers from the minimum wage increase, would help 50 times as many workers as those hit by job losses.
Correction: This article has been updated to accurately attribute comments from Lawrence Katz on CBO's study.