Increasing the federal minimum wage to $15 an hour by 2025, from the current $7.25 an hour level, as President Biden has called for, would cut employment by 1.4 million and reduce the number of Americans below the poverty line by 900,000, according to a study released by the nonpartisan Congressional Budget Office on Monday.
The cumulative federal budget deficit from 2021 to 2031 would increase by $54 billion if a $15 federal minimum was enacted because higher prices for goods and services would contribute to an increase in federal spending, the report found. Government spending on nutrition supplements would fall, but that would be offset by increased spending on Social Security benefits, unemployment benefits and health-care programs, the CBO said.
The report found enrollment in Medicaid, health care for low-income Americans, would fall because many workers would earn more, but program costs would increase to higher prices for medical services.
Economic output would be reduced slightly, primary because of decreased employment, CBO said.
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