US Senate Committee on Health, Education, Labor, & Pensions

Alexander: Minimum Wage Hike “a Stale, Bankrupt, Ineffective Policy” That Will Destroy 500,000 Jobs

Congressional Budget Office Director confirms proposal could cost as many as 1 million jobs, cause only 20% of benefits to go to families below poverty level

Wednesday, March 12, 2014Liz Wolgemuth 202-228-4729

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“There are better ideas: reform refundable tax credits to benefit all low-income workers, replace long-term unemployment compensation with job training, change Obamacare’s work week definition from 30 hours to 40 to encourage full-time jobs, and use existing federal education dollars to give children of low-income families a $2,100 scholarship to choose a better school.” –Lamar Alexander

Washington, D.C., March 12 – At a hearing today of the Senate labor committee, U.S. Senator Lamar Alexander, the committee’s senior Republican, said there were better ideas with bipartisan support to reduce poverty than Democrats’ proposal to increase the minimum wage by nearly 40 percent, which would cause a loss of 500,000 jobs, according to a balanced view by the nonpartisan Congressional Budget Office.

“I believe families shouldn’t live in poverty but the idea of raising the minimum wage to address that is a stale, bankrupt, ineffective policy,” Alexander said. “According to the Congressional Budget Office, it will cost low-wage workers 500,000 jobs, make it harder to create more jobs, and give 80 percent of the benefits to families above the poverty level.”

Alexander said there are a number of amendments and proposals “that Republican senators would like to offer to this bill when we have an opportunity to amend it—proposals that will create a pro-growth economy with more good jobs.”

“There are better ideas,” Alexander said. “Reform refundable tax credits to benefit all low-income workers, replace long-term unemployment compensation with job training, change Obamacare’s work week definition from 30 hours to 40 to encourage full-time jobs, and use existing federal education dollars to give children of low-income families a $2,100 scholarship to choose a better school.”

At the hearing, in response to Alexander’s questions, Congressional Budget Office director Douglas Elmendorf testified that the CBO projects job losses as a result of increasing the minimum wage to $10.10 an hour could reach as high as 1 million, or as little as a very slight decrease, and that 500,000 losses was its “central estimate.”

Elmendorf also testified that just one in five of the dollars earned from the increase will go to workers who are members of families below the poverty level, and that nearly one-third of those families that would benefit from the minimum wage increase already earn more than three times the poverty level.

Alexander said today: “My hope is that if we were going to continue to consider this proposal about jobs, that we would be allowed to offer amendments that would do better than cause a loss of 500,000 jobs—according to a balanced view by the nonpartisan Congressional Budget Office—and would provide benefits to a greater share of Americans living below the poverty level than the 2 percent this proposal would help—also according to the CBO—and that would not make it more expensive to create jobs, which would seem to me to be exactly the opposite of what we should be doing in a period of time when we’ve had such longstanding unemployment among so many people.”

He added: “We would like to raise family incomes. We would like to help people move up the economic ladder. But we have a different philosophy. We’d like to take the big, wet blanket of rules and regulations off the economy that has been put on in the last few years and offer specific amendments that would that would create more growth in our economy, more jobs.”

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