In a stinging rebuke to President Obama’s clarion call for a $10.10 per hour minimum wage, more than 500 economists sent an open letter to Congress Wednesday refuting the proposal as a panacea for poverty. Instead, they argued for a comprehensive approach to a complex problem.
“One of the serious consequences of raising the minimum wage is that business owners saddled with a higher cost of labor will need to cut costs, or pass that increase to their consumers in order to make ends meet. Many of the businesses that pay their workers minimum wage operate on extremely tight profit margins, with any increase in the cost of labor threatening this delicate balance,” they wrote.
Signers included three Nobel laureates and members of past administrations, such as George Shultz, former secretary of State and Treasury, reported the Washington Examiner.
The letter was sent as the Senate was debating the issue, and noted that the non-partisan Congressional Budget Office (CBO) had poignantly stated that less than 20 percent of minimum wage workers live in households below the federal poverty line.
“According to the CBO,” they wrote, “raising the federal minimum wage to $10.10 per hour would cost the economy 500,000 jobs by 2016. Many of these jobs are held by entry-level workers with limited experience or vocational skills, the very employees meant to be helped,”
The economists described Obama’s initiative as sounding nice, but no silver bullet. “…Poverty is a serious, complex issue that demands a comprehensive and thoughtful solution that targets those Americans actually in need.”
Read the letter here.
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