By Max Kutner

Law360 (February 8, 2021, 8:08 PM EST) -- Raising the federal minimum wage to $15 an hour, which Democrats are seeking, would result in 1.4 million people losing employment by 2025, even as millions more workers would see pay increases, the Congressional Budget Office said in a report Monday.

The CBO, a nonpartisan agency that provides budget and economic information to Congress, said the Raise the Wage Act that would increase the federal minimum wage in increments from $7.25 to $15 an hour by 2025 would lead to pay increases for up to 27 million workers, but also job losses due to increased costs for employers.

"Employers would pass some of those increased costs on to consumers in the form of higher prices, and those higher prices, in turn, would lead consumers to purchase fewer goods and services," the report said. "Employers would consequently produce fewer goods and services, and as a result, they would tend to reduce their employment of workers at all wage levels."

Democrats in the U.S. Senate and House of Representatives introduced the Raise the Wage Act in January. By 2025, the legislation would affect 17 million workers who would otherwise make less than $15 an hour, and could also affect a portion of 10 million more workers who would otherwise make just above that threshold, the CBO report said. It would also bring 900,000 people out of poverty, according to the report.

But the wage hike would also reduce employment by 1.4 million workers, the report said. Half of those people would drop out of the labor force by 2025, a disproportionate number of them young and less educated, according to the report.

The legislation would increase the federal deficit by a cumulative $54 billion over the next decade and cause prices for goods and services to increase, the report said.

President Joe Biden has supported raising the minimum wage to $15 per hour. The legislation was going to be part of a $1.9 trillion COVID-19 stimulus package, but Biden said in a news interview Sunday that he no longer expected the package to include it.

Jen Psaki, the White House press secretary, said at a briefing Monday that Biden "remains firmly committed to raising the minimum wage to $15." The president had been referring in his comments to "the parliamentary process" and the "parliamentarian who will make decisions about what can end up in a final package," Psaki said.

In January, Biden signed an executive order seeking recommendations for raising the hourly minimum wage to $15 for federal employees.

A Feb. 2 report on Biden's proposal by think tank Economic Policy Institute said that raising the minimum wage to $15 an hour would raise Federal Insurance Contributions Act taxes each year by $7 billion to $13.9 billion. Employees pay half of those taxes and employers pay the other half.

Sponsors of the Raise the Wage Act said the CBO findings showed why a minimum wage hike is necessary, and they emphasized the finding about pay increases for up to 27 million Americans.

"Today's report makes clear what we've known all along: raising the minimum wage — which hasn't increased since 2009 — to $15 an hour isn't just the right thing to do, it's good policy that will give a raise to up to 27 million workers and lift almost 1 million people out of poverty," Sen. Patty Murray, D-Wash., the Senate Health, Education, Labor and Pensions Committee, said in a statement Monday.

Rep. Robert C. Scott, D-Va., who chairs the House Committee on Education and Labor, and introduced the legislation with Murray and Sen. Bernie Sanders, I-Vt., said in a statement Monday, "This nonpartisan report shows that increasing the minimum wage will act as a direct and targeted stimulus for struggling workers and their families."

Scott also released on Monday his committee's portion of the budget reconciliation bill that enacts Biden's American Rescue Plan, which includes a $15 minimum wage provision. The legislation calls for incremental raises to the minimum wage over the next four years.

However, Rep. Virginia Foxx, R-N.C., the Republican leader of the Education and Labor Committee, criticized that portion of the budget reconciliation bill. 

"From a national $15 minimum wage that would destroy millions of jobs around the country, to the unnecessary and unprecedented expansion of workers' compensation, this isn't the 'bold relief' Americans need," Foxx said in a statement Monday. "House Democrats will stop at nothing to advance their own partisan, hackneyed agenda while blatantly ignoring the will of the American people."

Rachel Greszler, a research fellow at the Heritage Foundation, a conservative think tank, said the CBO report shows how raising the minimum wage could price workers out of the labor force.

"It shows that, unfortunately, policymakers can't just waive their wand through legislation and achieve what we all would like, which is higher income," Greszler told Law360 on Monday. "A $15 per hour minimum wage across the entire country would really spiral out to have all these unintended consequences, and those would be hardest hit in the lower-cost areas and also on the people that we most want to help."

--Additional reporting by Theresa Schliep. Editing by Neil Cohen.

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