CBO: $15 minimum wage hike would cost 1.4M jobs, lift 900K out of poverty

Yahoo Finance's Jessica Smith joins Kristin Myers to break down the Congressional Budget Office's new report on raising the federal minimum wage to $15/hour.

Video Transcript

KRISTIN MYERS: Welcome back to Yahoo Finance Live. I want to turn now to our chief political correspondent, Jessica Smith, for the latest on the Hill. The Congressional Budget Office releasing a new report on the impact of raising the minimum wage. Hey, Jess.

JESSICA SMITH: Hey, Kristin. This was a highly anticipated report. Lawmakers were hoping that this could bolster their case for raising the minimum wage to $15 an hour in the next COVID relief bill. So what this report found was that this would add $54 billion to the deficit over the course of 10 years. It would also cost 1.4 million jobs, but it would lift 900,000 people out of poverty, and it would give a raise to at least 17 million people. And it could help many of the 10 million people who make just above the minimum wage.

The report also found that higher govern-- find it would lead to higher government spending on certain programs like Medicare, Medicaid, unemployment benefits. And it would decrease spending on programs like food stamps. Now progressives are really pushing back against this report. We've heard from Senator Bernie Sanders, the Economic Policy Institute. They are questioning the report itself.

But Senator Sanders says this at least shows that the Senate should be able to take this up and consider this under the reconciliation rules, so that process that would allow them to pass the COVID relief process with just-- or relief package with just a simple majority vote. Now we should note the Senate parliamentarian will actually make that call that Senator Bernie Sanders says he thinks it shows they can do it.

President Biden said in a recent interview that he doesn't think they are actually going to be able to include this in the relief package. He says that they might have to consider the minimum wage hike separately. The White House Press Secretary spoke about this just a short time ago. Let's watch.

- The president remains firmly committed to raising the minimum wage to $15. That's why he put it in his first legislative proposal. And he doesn't-- he believes that any American who is working a full-time job, trying to make ends meet, should not be at the poverty level. And it's important to him that the minimum wage is raised.

JESSICA SMITH: Kristin, one note from the briefing, Jen Psaki did acknowledge that the most likely path to pass this relief bill is going to be reconciliation. So now we are waiting to see what the Senate parliamentarian says. If the parliamentarian says they can include that $15 minimum wage hike in the package or not, that's the next big thing we need to watch here.

KRISTIN MYERS: So Jess, what is Democrats' next moves going to be on this, especially as-- and I should mention for everyone at home, the CBO is a nonpartisan group that makes these reports and has these findings. So they are neither Democrat nor Republican, progressive nor conservative. So for progressives in Congress right now, what's the next move going to be, as they're questioning it almost seems like the validity of this report or of the report itself?

JESSICA SMITH: Right, we have heard from some groups. Like I mentioned, EPI said said that they were questioning the report itself. But they still said that the wage increase leads to good policy, and that that's what they are also drawing from this report. They're pointing to the millions of people that it's going to pull out of-- or that it would give a raise to. So they are pointing to some good things in this report.

But I think Democrats now are going to see what the Senate parliamentarian says. And then if it cannot be included in this reconciliation package, there is a chance that they could override her. It's not clear if they would actually do that at this point. But that is a move they could consider. So we'll just have to see what happens.

KRISTIN MYERS: Absolutely, one of the tradeoffs there, as you were highlighting, one million Americans roughly being lifted out of poverty from this move. Chief political correspondent Jessica Smith, thank you for bringing us all of those updates.