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CBO report details difficult balance of raising the federal minimum wage

Capitol Hill Capitol Building Capitol Dome
Posted at 5:04 PM, Feb 08, 2021
and last updated 2021-02-08 20:57:32-05

DENVER — As Democrats continue to push an increase to the federal minimum wage, a new report from an independent agency shows the difficult balance doing so could bring.

The report, released Monday by the Congressional Budget Office, found that gradually increasing the federal minimum wage from $7.25 to $15 by 2025 could lift 900,000 people out of poverty, but it could also kill roughly 1.4 million jobs.

But the increase in pay goes a lot further than people think, according to former restaurant worker John Alvarez.

"Having a savings account, going on vacation, being able to afford health care," he said. "That can be a more reliable car or, you know, a nicer place."

Alvarez quit his job at a restaurant in Denver in October 2020. He now works at the nonprofit One Fair Wage and advocates for a higher minimum wage, especially for tipped workers.

"You wear so many hats that are so important that safeguard the restaurant and their business, but we aren't paid enough to do all those things," Alvarez said.

But University of Denver finance professor Dr. Mac Clouse says an increase to the federal minimum wage, especially during the current economic climate, could come at a cost.

"They've either got to pass that increased cost in terms of higher prices for their goods and services or they just can't have as many employees," he said.

Colorado is already ahead of the curve, though. The state's minimum wage is $12.32. It goes up each year to account for the cost of living. For tipped workers, it's $9.30. The Raise the Wage Act would make the minimum wage equal for all workers.

But if the Democrat plan passes, the federal minimum wage would likely pass Colorado's current rate by mid-2023 when it's expected to be at $12.50. But by then, the economy may be in a better position to absorb the change.

"If the economy is going stronger, then the businesses can afford to share some of that increased wealth," Dr. Clouse said.

Alvarez knows he's fighting an uphill battle. He's aware it'll be difficult to get everyone on board, but he says something needs to change.

"I don't think that there should be any American that works 40 hours a week and can’t afford to pay his bills. I think that is un-American," he said.