Minimum Wage: Budgetary Savings vs. Labor Market Costs

American Action Forum (AAF) research finds that the labor market costs of raising the minimum wage far outweigh any budgetary benefits. Some argue that increasing the federal minimum wage would be an effective way to reduce dependence on federal government safety net programs such as the Earned Income Tax Credit (EITC) or Temporary Assistance for Needy Families (TANF). The evidence suggests, however, that the fiscal savings are minimal when compared to the labor market consequences. While other research finds that raising the minimum wage to $10.10 per hour would reduce safety net spending by $7.6 billion, AAF finds that it would also reduce job creation by 2.2 million jobs per year. For those who are unable to find work, this means a loss of $19.8 billion in earnings per year.

The Daily Dish

The Wall Street Journal featured an optimistic view of the outlook for consumer spending during the holidays. Recent data from the Bureau of Economic Analysis shows that the personal saving rate has held steady at roughly five percent during 2014, in contrast to a previously-reported rise to as high as 5.6 percent earlier in the year. The steady saving rate, the argument goes, combined with lower unemployment and faster — though still tepid — wage increases portends a financially healthy household sector that will open its pocketbook during the crucial end-of-the-year sales season.

The Daily Dish

As the end of August recess quickly approaches, all eyes turn to the loaded September agenda. Included on the to-do list is the reauthorization of America’s official export credit agency (ECA), the Export-Import Bank. This year its renewal has attracted outsized political attention in comparison to the limited, albeit important, role the agency plays in helping American companies export their goods and services.

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