White House, Big Labor: The CBO has no idea what it’s talking about on minimum wage

posted at 8:41 pm on February 18, 2014 by Erika Johnsen

What else can they say, really? The Democrats have built their entire midterm strategy on an economic populism focused around the minimum wage as a way to both cudgel Republicans and distract from ObamaCare’s woes — it’s much too late to turn back now, not even for a super official, nonpartisan report confirming many of the plan’s negative effects on the job market and those in poverty to which Republicans have been pointing. This one’s getting the White House’s full sugarcoat/whitewash treatment, via the WFB:

A top White House economist says that President Obama’s minimum wage increase will have “zero effect” on employment, despite a CBO report that the proposed hike would likely eliminate 500,000 jobs.

“Our view is that zero is a perfectly reasonable estimate of the impact of raising the minimum wage on employment,” Council of Economic Advisers chairman Jason Furman said on a conference call with reporters shortly after the report came out.

Furman said the CBO was out-of-step with the White House’s views on the proposed 40 percent hike, though he praised the report for highlighting wage boosts that will accompany the hike.

“Sometimes you have respectful disagreement among economists,” he said of the parts of the study that did not confirm White House rhetoric about the $10.10 wage.

“Our view is that zero is a perfectly reasonable estimate of the impact of raising the minimum wage on employment.” …Geez, man — if that’s how you feel, how can you possibly justify stopping at $10.10? Why not $20? Why not a million, and we can all live happily ever after?

And of course, the obligatory Labor reaction, via the WSJ:

Organized labor wasted no time responding to a Congressional Budget Office report that undermines one of unions’ top priorities: raising the federal minimum wage, along with wages in general. …

Richard Trumka, president of union federation AFL-CIO, which is holding its winter meeting in Houston this week to strategize for the year,  immediately challenged the study’s findings and said it echoed false claims by conservatives.

“Every time momentum builds for lifting wages, conservative ideologues say it will cost jobs.  Every time, they’ve been dead wrong,” Mr. Trumka said in a statement emailed during his closed-door meeting with labor leaders in a Hilton hotel ballroom.

“This is more of the same noise,” Mr. Trumka said, adding that conservative economists don’t care about workers.  “Our country is finally poised to lift millions out of poverty and make our country work for the people who work. Let’s raise the wage and we’ll prove the CBO wrong again,” he added.

“Let’s raise the wage and we’ll prove the CBO wrong again”? Is that kind of like, “We have to pass it to find out what’s in it”?


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In other words, “We know better than you. Trust us. Math is hard. Government always gets it right.”

TheLoudTalker on February 18, 2014 at 8:43 PM

Because people love to go spend more money for the same thing they used to get for less.

The new sale: You can pay more ! Come on in!

CWchangedhisNicagain on February 18, 2014 at 8:43 PM

Richard Trumka – what a thug looks like. A 4′ 11″ thug.

bw222 on February 18, 2014 at 8:45 PM

Let’s raise the wage and we’ll prove the CBO wrong again,” he added.

This guy wouldn’t be personally gaining from this now would he?

///////

CWchangedhisNicagain on February 18, 2014 at 8:45 PM

“Our view is that zero is a perfectly reasonable estimate of the impact of raising the minimum wage on employment.”

Flat earthers.

forest on February 18, 2014 at 8:45 PM

Tune in tomorrow for another proclamation that
0 is a perfectly reasonable estimate of our Nation’s Debt.

ToddPA on February 18, 2014 at 8:47 PM

“Our view is that zero is a perfectly reasonable estimate of the impact of raising the minimum wage on employment.”

Flat earthers liners.

forest on February 18, 2014 at 8:45 PM

ReWrite™ engaged for the mandatory EKG scans of Team SCOAMT.

Steve Eggleston on February 18, 2014 at 8:48 PM

Why not $25/hour? Or $50?
Because economic reality. That’s why.
And yet the underemployed, and unemployed more often than not support these Stalinist buffoons.

We are receiving the governance, and the healthcare that we deserve as a nation.
We will not enjoy it. It will not be over quickly. And when both change, they will do so badly.

orangemtl on February 18, 2014 at 8:49 PM

“Our view is that zero is a perfectly reasonable estimate of the impact of raising the minimum wage on employment,”

Are they talking about Bambi again?

NapaConservative on February 18, 2014 at 8:49 PM

“Let’s raise the wage and we’ll prove the CBO wrong again,” (Trumka) added.

Yeah, you’ll prove the CBO wrong…by causing the shedding of 1,000,000 jobs.

Steve Eggleston on February 18, 2014 at 8:50 PM

Damn the CBO…

Damn history..

Damn truth…

Damn the tea party..

Damn common sense..

Electrongod on February 18, 2014 at 8:51 PM

“This is more of the same noise,” Mr. Trumka said, adding that conservative economists don’t care about workers. “Our country is finally poised to lift millions out of poverty and make our country work for the people who work. Let’s raise the wage and we’ll prove the CBO wrong again,” he added.

So when Union Members read this kind of illogical crap from Union “Leader” Trupka, does it wake them up even a little bit?

I used to just blame the Union “Leaders” for the damage Unions have done to cities like Detroit.

But at some point, the Union Members become responsible for the policies of the “Leaders” they choose to follow.

wren on February 18, 2014 at 8:53 PM

Trumka’s still smarting from the union loss at VW. He knows the unions (not just the UAW) are dying. This is an opportunity to collect more dues protect workers, of course.

Doc Holliday on February 18, 2014 at 8:54 PM

These aren’t the droids you’re looking for. You can go about your business. Move along.

Philly on February 18, 2014 at 8:55 PM

Evening

Electrongod on February 18, 2014 at 8:51 PM

couldn’t have said that any better….(waving at ya)

CoffeeLover on February 18, 2014 at 8:55 PM

CoffeeLover on February 18, 2014 at 8:55 PM

Waving back at ya….:)

Electrongod on February 18, 2014 at 8:56 PM

Minimum wage is above Obama’s pay grade at this point.

battalion on February 18, 2014 at 8:59 PM

“Let’s raise the wage and we’ll prove the CBO wrong again”?

Just like you proved them wrong that Obamacare would be “revenue neutral.”

There’s an old programming phrase I like that seems to fit pretty much everything the “non-partisan” CBO does:

Garbage In/Garbage Out.

The CBO works under such ludicrous restrictions that it is conceivable to get an almost infinite array of results from them, based on the garbage that they are forced to work with.

I don’t trust this figure any more than I trust ANY number that comes out of the CBO.

arik1969 on February 18, 2014 at 9:00 PM

Minimum wage is above Obama’s pay grade at this point.

battalion on February 18, 2014 at 8:59 PM

winner

Grunt on February 18, 2014 at 9:02 PM

GEEEE, Trumka.

Lets look at the minimum wage and unemployment in 2007 when those wonderful smart democrat buddies of yours took office.

They hiked the minimum wage TWICE in a year’s time and the unemployment rate SHOT up. I know facts are hard to take and all but this is the really-real world.

DavidM on February 18, 2014 at 9:02 PM

Yeah, look at this administration’s track record… Go part of ” astrology”… Er… Science

uncommon sense on February 18, 2014 at 9:05 PM

Microsoft, Apple, Jobs, Silicon Valley, California, Tech Startups, Google, Future…

The bayam bingo drink card is full.

Murphy9 on February 18, 2014 at 9:06 PM

Maybe the CBO has problems, but in my view they are more credible than the Obama

aknews on February 18, 2014 at 9:07 PM

“Every time momentum builds for lifting wages, conservative ideologues say it will cost jobs. Every time, they’ve been dead wrong,” Mr. Trumka said…

What reality does Trumka live in. Certainly not the real one.

sadatoni on February 18, 2014 at 9:09 PM

Even a conservative like Phyllis Schlafly sees the wisdom of a minimum wage increase. For all the bleating about crony capitalism, a lot of conservatives still defend the subsidy of low-wage paying companies through the welfare state.

Pasionaria on February 18, 2014 at 9:13 PM

IDJITS !!!!

Arrgh !!!!!

pambi on February 18, 2014 at 9:13 PM

Hey bayam – where are you for this thead?
You screwed yourself into a circle on the minimum wage thread.
So tell us over here – Why do liberal run companies move their operations overseas for reduced costs and increased shareholder value?
Come on, splain it to us dum capitalists….

dentarthurdent on February 18, 2014 at 9:17 PM

Evening

Electrongod on February 18, 2014 at 8:51 PM

couldn’t have said that any better….(waving at ya)

CoffeeLover on February 18, 2014 at 8:55 PM

.
You forgot “damn reality”.

listens2glenn on February 18, 2014 at 9:17 PM

One of my favorite parts of the Clinton administration was when it pushed a minimum wage increase. One of the White House economic advisers had written an econ text which, like every econ text, explored the effect of price floors on the quantity and supply of a product. (Hint: price floors above market decrease the quantity demanded and increase the quantity supplied). The adviser had to publicly repudiate his own text.
Let’s not be naive about why organized labor supports increases in the minimum wage. If you have to pay more than before for labor, the 16 yo with acne might not be worth the new wage but the older guy who can be organized by labor might be. Labor tries to unemploy the young and unskilled to benefit the older and more skilled.

jvermeer on February 18, 2014 at 9:19 PM

Even a conservative like Phyllis Schlafly sees the wisdom of a minimum wage increase. For all the bleating about crony capitalism, a lot of conservatives still defend the subsidy of low-wage paying companies through the welfare state.

Pasionaria on February 18, 2014 at 9:13 PM

That is a BS canard talking point. The poverty rate will rise to meet the new equilibrium, as is always has. So “subsidizing” minimum-wage workers will not go away.

Jeff Weimer on February 18, 2014 at 9:20 PM

Well sure. Dog Eater and Hoffka are probably the world’s preeminent economists as evidenced by their long experience in the field.

Bishop on February 18, 2014 at 9:20 PM

Where are you bayam? Come out and play some more….

From the minimum wage thread:

After all, Apple, Google and Chevron can hardly compete in the global economy and really need a tax break, esp. with corporate profits at record highs. Right?

bayam on February 18, 2014 at 8:49 PM

2 out 3 of those are your liberal heroes, and most of their operations and profits are overseas.
Why is that?
And, how are they getting record profits – i.e. shareholder value?

dentarthurdent on February 18, 2014 at 9:20 PM

dentarthurdent on February 18, 2014 at 9:21 PM

a lot of conservatives still defend the subsidy of low-wage paying companies through the welfare state.

Pasionaria on February 18, 2014 at 9:13 PM

Me thinks your just repeating some line you thought was some big gotcha. Come on big thinker. Tell us about cons defending subsidies for low paying companies. What money have cons voted for to give to these low paying types?

CWchangedhisNicagain on February 18, 2014 at 9:21 PM

a lot of conservatives still defend the subsidy of low-wage paying companies through the welfare state.

Pasionaria on February 18, 2014 at 9:13 PM

So quiet …not surprised.

So now that we know you’re a fan of Schafly I will assume you’re pro-life and anti-feminist. Oh wait you’re one of those cafeteria Schlafiests.

This was the first time I noticed a post of yours. Pretty weak. Better luck next time.

CWchangedhisNicagain on February 18, 2014 at 9:31 PM

Our view is that zero is a perfectly reasonable estimate of the impact of raising the minimum wage on employment,” Council of Economic Advisers chairman Jason Furman said on a conference call with reporters shortly after the report came out.

After reading Jason Furman’s idiotic statement, I got curious about were the White House found him so I did some Googling.

The Washington Post did its best to position Jason Furman as a brilliant economic wonk, but after reading their article I have more reasons to believe he is a full-fledged, over-educated, idiot.

The whole Washington Post article is worth a read if you want to learn more about the guy who is driving our economy off a cliff, but the excerpt below was my favorite part:

Economist Jason Furman is the wonkiest wonk in the White House

Even his kids – Henry, 6, and Louisa, 5 — have fallen victim to his hyper-rational mind. In hopes of giving them a good scientific education, Furman told his children several years ago there’s no such thing as fish. How could that be? It’s actually true, because “fish,” as we think of them, don’t actually have a common ancestor, and so they are not considered by scientists to be a cohesive biological unit.

But his kids weren’t buying it, and a trip to an aquarium was all they needed to disprove their dad. It’s been a source of perpetual teasing ever since.

http://www.washingtonpost.com/lifestyle/style/economist-jason-furman-is-the-wonkiest-wonk-in-thewhite-house/2014/02/12/7e14b7bc-8e8f-11e3-b227-12a45d109e03_story.html

Thank goodness Jason Furman’s young children have maintained some common sense! Although at ages 5 & 6 they have probably only just begun their formal education which will do its best to wring that common sense right out of them.

wren on February 18, 2014 at 9:32 PM

wren on February 18, 2014 at 9:32 PM

Furball imagines himself working up in the American Kremlin, setting policy and making decisions on resource allocation because he’s super smart. No ditch digging for him, nossir, he’s a decider not a worker.

Bishop on February 18, 2014 at 9:34 PM

Yeah, it’s not like raising the minimum wage will impact a companies profit and earnings ratio or anything.

or so says Barack Obama the guy who knows more about economics than any of his economists.

“Every time momentum builds for lifting wages, conservative ideologues say it will cost jobs. Every time, they’ve been dead wrong,” Mr. Trumka said in a statement emailed during his closed-door meeting with labor leaders in a Hilton hotel ballroom.

Actually, Dick. We’ve been right every single time.

See research done by David Neumark and William Wascher for the National Bureau of Economic Research. Have someone read it to you slowly so you can understand.

HumpBot Salvation on February 18, 2014 at 9:35 PM

Thank God the CBO is out of step with the Whitehouse.

vnvet on February 18, 2014 at 9:38 PM

…why does that pic always look…like JugEars is corn-holing him?

KOOLAID2 on February 18, 2014 at 9:39 PM

Let’s raise the wage and we’ll prove the CBO wrong again,” he added.

Yes, I would follow Union advice on economic issues. Look how well Detroit is doing, not to mention union membership. Clearly they are the optimal source for quality economic analysis.

talkingpoints on February 18, 2014 at 9:54 PM

Why not $25/hour? Or $50?
Because economic political reality. That’s why.

orangemtl on February 18, 2014 at 8:49 PM

just a little fix.

Solaratov on February 18, 2014 at 9:55 PM

IMHO if anything the CBO is overly optimistic. There are synergies that can amplify the damage.

mad scientist on February 18, 2014 at 9:59 PM

The Democrats may be the most stupid economics people around. The people who believe the pie is only so big, also believe they can keep taking their piece of the pie, but it doesn’t leave less for everyone else.

I would have a lot more respect for Obama if he were willing to call the CBO up there to explain what all went into their calculation. He really might learn something. However, if he learns something it won’t be as easy to demagogue the Republicans so I’m betting he’ll pass.

bflat879 on February 18, 2014 at 10:00 PM

I guess the White House and the AFL-CIO are saying that demand for labor is perfectly price-inelastic–that is, no matter the wage, demand always stays the same. It’s no never mind to Jason Furman whether the neighbor’s teenager asks for $20 or $2,000 to mow the lawn–the lawn must be cut! No point to haggling over price.

Yeah, that makes sense.

ddh on February 18, 2014 at 10:03 PM

So, how soon after a minimum wage increase will the Treasury Dept. demand another “loyalty oath” on business tax forms, attesting that the workers fired by the company were not fired because of the wage increase…under penalty of perjury?

Solaratov on February 18, 2014 at 10:06 PM

The Bush Tax Cut recovery, which raised both employment levels (from 62.0% in September 2003 to 63.4% in December 2006) and revenues (FY 2007 revenues were up a whopping 44% larger than FY 2003 revenues!) came to a sudden end when Democrats took control of both houses Congress on January 3, 2007.

What did Democrats do?

On January 5, 2007, just two days into the new Democrat majority, Democrats introduced a bill to raise the minimum wage three times in three years. That bill was eventually passed as a rider to troop funding (the U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007), and the minimum wage was raised three times in three years, from $5.15 per hour to $7.25 per hour (a more than 40% increase in 3 years).

==============================================
EACH time that the Democrat majority raised the minimum wage, EMPLOYMENT DROPPED!
==============================================

The Democrat majority raised the minimum wage:

1) Up $0.70 to $5.85 per hour on 2007-07-24,
2) up $0.70 to $6.55 per hour on 2008-07-24,
3) up $0.70 to $7.25 per hour on 2009-07-24.

… and the Employment-Population ratio dropped to:

62.9% in July 2007,
62.2% in July 2008,
59.3% in July 2009,

and has been BELOW 59.0% for 53 consecutive months (nearly FOUR AND HALF YEARS) September 2009 – January 2014!

(And of course, Obama and many Democrats want to foolishly raise the minimum wage AGAIN now, to $10.10/hr!)

ITguy on February 18, 2014 at 10:13 PM

I guess the White House and the AFL-CIO are saying that demand for labor is perfectly price-inelastic–that is, no matter the wage, demand always stays the same. It’s no never mind to Jason Furman whether the neighbor’s teenager asks for $20 or $2,000 to mow the lawn–the lawn must be cut! No point to haggling over price.

Yeah, that makes sense.

ddh on February 18, 2014 at 10:03 PM

Ya – no kiddin’.
We’ve had a OT of snow this year. I usually shovel my own driveway and sidewalk. Last storm there was a lot and I wasn’t looking forward to shoveling, and just before I went out a kid came to the doo saying he’d shovel it all for $15 or so. I agreed, let him shovel it – he did a good job very quickly – so I gave him a $20.
I COULD have done it myself and saved $20.

dentarthurdent on February 18, 2014 at 10:15 PM

My keyboard is just not working right when I’m in HA. Keeps missing letters. Been through 3 keyboards now, and they all do the same thing – and only in HA – doesn’t happen elsewhere. Getting really frustrated.

dentarthurdent on February 18, 2014 at 10:18 PM

“Our view is that zero is a perfectly reasonable estimate of the impact of raising the minimum wage on employment.” …Geez, man — if that’s how you feel, how can you possibly justify stopping at $10.10? Why not $20? Why not a million, and we can all live happily ever after?

Eh. Strawman argument like this is poor form for someone who actually believes she is on the winning side.

In a country of 300 million people, 500,000 jobs might as well be zero (it’s nothing a string of good months in employment can’t erase, and certainly nothing compared to the number of people population growth adds to the (potential) workforce each year).

Just because that’s the effect of raising minimum wage to $10.10 doesn’t mean somebody must be for requiring federal contractors to pay their workers like doctors and lawyers.

novakyu on February 18, 2014 at 10:24 PM

“Our view is that zero is a perfectly reasonable estimate of the impact of raising the minimum wage on employment,”

And that’s why King Barack the Magnificent put off the Employer Mandate until after the elections.

Furman has his head so far up his ass, it’s a wonder he can breathe.

GarandFan on February 18, 2014 at 10:24 PM

My keyboard is just not working right when I’m in HA. Keeps missing letters. Been through 3 keyboards now, and they all do the same thing – and only in HA – doesn’t happen elsewhere. Getting really frustrated.

dentarthurdent on February 18, 2014 at 10:18 PM

I’ve had the same experience at times. When I open something like Notepad, I can type fine.

I have to wonder if there’s a problem with ads that run on HotAir that cause significant performance issues on the end user’s computer. I also have to wonder if that is not intentional on the part of HotAir’s enemies, who may be getting malware ads into the ad delivery system here. I have no hard evidence, just performance issues that are unique to visiting HotAir, like the missing letters issues you are experiencing…

ITguy on February 18, 2014 at 10:32 PM

novakyu on February 18, 2014 at 10:24 PM

Ok – so why not higher then? How high can you jump the minimum wage and still have “zero” impact? Why not go to that level?
Is 1 million unemployed still “zero impact”? How about 2 million? 10 million? 50 million?
Where’s your acceptable break point in added costs, increased prices, and higher unemployment for telling people how to run their own business?
Please, enlighten us.

dentarthurdent on February 18, 2014 at 10:33 PM

novakyu on February 18, 2014 at 10:24 PM

except that those 500,000 jobs isn’t across the total workforce in general. It will hit the small part of the population they are trying to help the most. The CBO claims 16.5 million only would be affected… just for fun what if the .3% drop in the work force was only against that group, or even those just on the other side of $10.10. Just sayin

uncommon sense on February 18, 2014 at 10:40 PM

If you like your plan you can keep your plan

Brock Robamney on February 18, 2014 at 10:48 PM

The White House is saying that if you like your minimum wage job, you can keep it–no one will take it away.

ddh on February 18, 2014 at 10:49 PM

Why is being unemployed at $10.10 per hour better than being employed at $7.25 per hour? Or is that Obama’s way of giving 500,000 more Americans a chance to “pursue their dreams?”

Colony14 on February 18, 2014 at 10:52 PM

In a country of 300 million people, 500,000 jobs might as well be zero (it’s nothing a string of good months in employment can’t erase, and certainly nothing compared to the number of people population growth adds to the (potential) workforce each year).

novakyu on February 18, 2014 at 10:24 PM

Listen up, Einstein: 500k jobs is 3-4 months of job “gains” being reported in this current “recovery”. So your saying the eqivalent of wiping out a full quarter of job creation is nothing?

Further, we are not creating any net job gains in this country because they do not count the new workforce each month from population growth.

So to sum up, losing more jobs than we currently are “might as well be zero”?

Your an idiot. Next troll.

captnjoe on February 18, 2014 at 10:57 PM

BTW thanks for paying me not to work today!

Murphy9 on February 18, 2014 at 11:02 PM

In a country of 300 million people, 500,000 jobs might as well be zero (it’s nothing a string of good months in employment can’t erase, and certainly nothing compared to the number of people population growth adds to the (potential) workforce each year).

novakyu on February 18, 2014 at 10:24 PM

Well, given that we haven’t had a string of good months in employment since the crash, it would seem prudent not to jeopardize the fragile job market further.

Sadly there seems to be no economic competence in this administration or the Democratic Party in general, or in much of the mainstream media.

talkingpoints on February 18, 2014 at 11:23 PM

“Our view is that zero is a perfectly reasonable estimate of the impact of raising the minimum wage on employment.”

Estimate? Call it what it really is: wishful thinking.

There Goes the Neighborhood on February 19, 2014 at 12:13 AM

This guy wouldn’t be personally gaining from this now would he?

///////

CWchangedhisNicagain on February 18, 2014 at 8:45 PM

Of course he would. This is an incestuous gain.

Unions wages are based on the Federal Minimum Wage. So hiking minimum wage = raise in union wages = more union dues as a percentage of wages = my money into Democrat coffers.

Raising the minimum wage helps nobody but Labor Unions and Democrat politicians.

UnstChem on February 19, 2014 at 1:15 AM

except that those 500,000 jobs isn’t across the total workforce in general. It will hit the small part of the population they are trying to help the most. The CBO claims 16.5 million only would be affected… just for fun what if the .3% drop in the work force was only against that group, or even those just on the other side of $10.10. Just sayin

uncommon sense on February 18, 2014 at 10:40 PM

See above for who they know they are helping.

You’re in fantasy-land if you give the Democrats the benefit of the doubt that they are trying to help anyone but themselves.

UnstChem on February 19, 2014 at 1:22 AM

Furman said the CBO was out-of-step with the White House’s views on the proposed 40 percent hike

This is the second time the CBO has embarrassed the White House. How long before somebody decides to spend more time with family?

John Deaux on February 19, 2014 at 7:06 AM

Where in the world did they come up with the $10.10 figure? Hope the lofo minwage are up for some more leisure time cuz it’s gonna be coming at ‘em.

Kissmygrits on February 19, 2014 at 8:53 AM

Where in the world did they come up with the $10.10 figure? Hope the lofo minwage are up for some more leisure time cuz it’s gonna be coming at ‘em.

Kissmygrits on February 19, 2014 at 8:53 AM

It’ll be a great opportunity to write some poetry….

dentarthurdent on February 19, 2014 at 11:48 AM

In other words … In the world of a WH liar, everyone else must be a liar, too.

Carnac on February 19, 2014 at 12:21 PM

Gosh. that is strange, they are super smart when they agree with you Obozo, but dumber than a box of rocks when they disagree with you.

J Vance on February 19, 2014 at 12:50 PM