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Answers to Questions for the Record following a Hearing on the Minimum Wage Conducted by the Senate Committee on Health, Education, Labor, and Pensions 1 (May 22, 2014)

handle is hein.congrec/cbo1639 and id is 1 raw text is: MAY 22, 2014 Answers to Questions for the Record Following a Hearing on the Minimum Wage Conducted by the Senate Committee on Health, Education, Labor, and Pensions On March 12, 2014, the Senate Committee on Health, Education, Labor, and Pensions convened a hearing at which Douglas W Elmendorf, Director of the Congressional Budget Office, testified about CBO's report The Effects of a Minimum-Wage Increase on Employment and Family Income (February 2014), wwwcbo.govpublication/44995. Some Members of the Committee submitted further questionsfor the record, and this documentprovides CBO's answers. Chairman Tom Harkin Question. In your estimation, do the benefits of raising the minimum wage outweigh the costs? Answer. Whether the overall benefits of increasing the minimum wage outweigh the costs is a question for policymakers to decide. The Congressional Budget Office's report did point out, however, that the benefits and costs would be different for different groups of people. Most low-wage workers would receive higher pay that would increase their family's income, and some of those families would see their income rise above the federal poverty threshold. But some jobs for low-wage workers would probably be eliminated, and the income of most of the workers who became jobless would fall substantially. Other people would be affected differently. For example, a few higher-wage workers would owe their jobs and increased earnings to the heightened demand for goods and services that would result from a minimum- wage increase. In addition, business owners would see reductions in real (inflation-adjusted) income, as would consumers, who would face higher prices as a result of the minimum-wage increase. Question. CBO states that it weighted certain studies differently when creating its range of estimates for possible employment effects. Please explain CBO's methodology in detail. How did CBO determine the weights? Which specific studies were weighted and by how much? If the weights were changed, how would that affect the resulting estimates? Answer. CBO reviewed a wide variety of studies that used various methodologies and data sources to assess the effects of increasing the minimum wage on employment. (The studies are listed in Appendix B of The Effects of a Minimum-Wage Increase on Employment and Family Income and in the literature reviews cited in that appendix.) One common approach in those studies was to compare employment rates among states that had different minimum wages

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