The Republicans apparently think they got a powerful piece of ammunition from the Congressional Budget Office this week when it came out with an estimate that President Obama's minimum wage proposal would cost employers $15 billion a year. Under the "really big number" approach to public policy, many Republicans think they can scare people with a number that is much more money that almost anyone will see in their lifetime.
Fortunately at least some folks in the media recognize that their job is to inform rather than scare readers. The AP story on the report pointed out that the $15 billion represented roughly one third of one penny of every dollar paid out in wages. Are you scared yet?
Those looking for useful comparisons of the costs imposed by the higher minimum wage may also want to compare it to the savings we have seen from slower health care cost growth. Back in 2008 the Centers for Medicare and Medicaid Services projected that we would be spending $3,313 billion on health care in 2014. Their most recent numbers show us spending $3093 billion in 2014. This amounts to a savings of $220 billion, or more than 14 times as much as CBO projects the higher minimum wage will cost employers.
We can argue over the extent to which the Obama administration deserves credit for lower cost growth. But, there is no doubt that the savings on health care, which have largely passed on unnoticed, are a hugely bigger deal than any costs to employers due to a higher minimum wage.
Of course just because this money is not a big deal to employers doesn't mean it is not a big deal to minimum wage workers. It will make a big difference in the living standards of the families of minimum wage workers, 70 percent of whom live in families with incomes of less than $60,000 a year.
Note: Numbers corrected, thanks to Robert Salzberg.