U.S. Senator Braun: CBO Score Shows Democrats’ Wage Bill Will Kill Jobs

A new cost estimate from the nonpartisan Congressional Budget Office (CBO) shows that Congressional Democrats’ new reconciliation bill will kill jobs and result in billions of dollars of unfunded mandates on employers.    

Senators Braun, Burr, and Portman previously asked CBO to estimate the impact that wage mandates will have for the country.

 CBO’s February 8 analysis of the Raise the Wage Act, which was included in the budget reconciliation bill approved by House Education and Labor Democrats on February 9, contained no analysis of unfunded mandates, nor any mention of unfunded mandates.

CBO’s new analysis shows the budget reconciliation bill being pushed by Congressional Democrats contains both intergovernmental and private-sector mandates that are higher than the thresholds set by federal law. In fact, CBO estimates that by 2025—when minimum wage reaches $15 per hour under this bill—the additional annual cost to private-sector employers would be $45 billion.

CBO added that “Those amounts do not account for employers’ possible responses to the higher minimum wage, which could include reducing hiring, altering the composition of the minimum-wage and non-minimum-wage workforce, or purchasing equipment that would be substitute for workers.”  

Congress enacted the Unfunded Mandates Reform Act of 1995 to “control, if not eliminate, the imposition of unfunded intergovernmental and private-sector mandates,” yet Congressional Democrats seem committed to pushing through job-killing provisions contained in the House reconciliation bills, and at the peril of the American worker.

“As a business owner I prided myself on paying high wages, and I know that a $15 federally-mandated minimum wage would be a straitjacket on the economy and kill well over a million jobs, especially in areas hardest hit by COVID-19 like restaurants,” said Senator Braun. “What works for New York and California doesn’t work for Indiana, and Democrats should accept the findings of this nonpartisan cost estimate and abandon this job-killing bill that would stifle our economic recovery put more Americans out of work.” 

The legislation would
• Appropriate funds for education-related programs, labor-related programs, child care, human services, and community support programs, and nutrition programs
• Increase the federal minimum wage to $15 per hour by 2025, which would affect the federal budget and impose intergovernmental and private-sector mandates
• Expand eligibility for federally funded workers’ compensation benefits to certain federal employees and maritime workers affected by the coronavirus
• Subsidize premiums for coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA) at 85 percent for people enrolled in that coverage through September 2021

Estimated budgetary effects would mainly stem from
• Increased federal spending on education and child care programs
• Increased federal spending resulting from changes in employment, prices, and the distribution of income caused by a higher minimum wage
• Federal subsidies for COBRA premiums

Areas of significant uncertainty include
• Projecting the rate at which various entities would spend new budget authority
• Projecting the duration of school closures related to the coronavirus pandemic
• Estimating the behavior of businesses and individuals in response to a higher minimum wage and how those responses would affect federal spending and revenues


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