President Barack Obama’s proposal to raise the minimum wage to $10.10 per hour will cost the private sector $15 billion and increase the deficit by $5 billion over the next 10 years, according to a Congressional Budget Office report released Wednesday.
Private employers will lose $15 billion through higher wages for workers and smaller tax breaks for reinvesting money into a company, a move the CBO said “mostly affects small- to medium-sized businesses.”
State, local, and federal governments will spend $1 billion more on higher wages and prices over the next ten years. Those cost increases are ten times higher than the thresholds set forth in the Unfunded Mandates Reform Act, which calls on government agencies to avoid deficit increases.
The nonpartisan office found that the Senate’s minimum wage bill would drive up prices the government must pay for goods and services, while also leading to lost tax revenue.