Rep. Dan Crenshaw (R-TX) claimed on Monday that a proposed raise in the federal minimum wage was “emotionally driven” and “bad for economics.” His reasoning: businesses already have a budget for how much they will spend on workers’ wages and would not possibly increase it.
The first-term Texas Republican was on Fox News, explaining why he voted against the Raise the Wage Act last week. The bill, which passed 231 to 199 on Thursday, would gradually raise the hourly federal minimum wage from $7.25 to $15 for most workers. If it becomes law, it is estimated that it would raise pay for tens of millions of Americans.
Crenshaw pointed to an analysis by the non-partisan Congressional Budget Office (CBO) to make the case that a higher minimum wage would mean fewer jobs.
“Economically speaking, it causes job loss,” he warned. “The CBO estimates that up to 3.7 million jobs — 3.7 million jobs — would be lost under this kind of bill, and it’s not hard to understand why. When a business is faced with a new minimum wage, well their entire budget for salaries and payroll doesn’t, it doesn’t change. So they have to make changes themselves. They might have to cut hours and they might have to fire people, so while some people get a small increment all in crease others get 100% decrease in their wage because that’s what happens when you fire people.”
What Crenshaw failed to mention is that he selectively shared only the report’s worst case scenario. The actual CBO report predicted that the most likely scenario was that the number of jobs lost would be somewhere between zero and 3.7 million. It noted that while the research is not conclusive, many economic studies “have found little or no effect of minimum wages on employment.”
He also ignores the fact that the report predicted that — in its median prediction — 27 million Americans would get a raise and just 1.3 million would lose their jobs.
Perhaps most misleading is his argument that businesses simply have a budget that includes a fixed amount for wages and benefits, and that this can never go up. Businesses can often use more of their profits to compensate their employees. Larger corporations can scale back things like executive bonuses or private jets, if need be, to make sure their team is not living below the poverty level.
Finally, Crenshaw attempts to create the impression that the CBO predicted that more people would be in poverty with a minimum wage increase.
“It doesn’t help the people you’re trying to help. In some cases it hurts them because a lot of these people at minimum wage are adding to their household income and if they are priced out of the labor market, they can no longer add that income to their household. So a household that was not in poverty could potentially be in poverty and they studied this at the CBO as well. It’s really bad policy overall.”
But while they “studied” this at the CBO, the report’s actual findings largely contradicted Crenshaw’s argument. Overall, the analysis predicted, “The number of people with annual income below the poverty threshold in 2025 would fall by 1.3 million” under a proposal like the Raise the Wage Act.
Crenshaw suggested that the minimum wage should simply be decided at the municipal level, noting that the cost of living is well lower in Lubbock, Texas, than in San Francisco. But the Republican-controlled Texas legislature has not only refused to raise the statewide minimum wage above the federal level, it has also refused to allow local governments from doing so either.