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Another Minimum Wage Proposal

Summary:
There’s a rumored plan by Senators Romney and Sinema to raise the minimum wage to . Assuming the phase is four years (as in the proposed Cotton plan to raise to ) starting in June 2021, the trajectory of the real minimum wage looks like: Figure 1: Federal minimum wage in 2020$ (black), under Romney-Sinema proposal, assuming 4 year phase in (red), and Sanders proposal (teal). NBER defined recession dates and NBER peak shaded gray. Quarterly CBO CPI projections interpolated by quadratic match. Source: BLS, CBO (February 2021), NBER, author’s calculations. If the minimum wage is raised to in June 2024, then the real wage will match that last seen in February 1980. CBO has just revised their interactive tool for evaluating minimum wage proposals.

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There’s a rumored plan by Senators Romney and Sinema to raise the minimum wage to $11. Assuming the phase is four years (as in the proposed Cotton plan to raise to $10) starting in June 2021, the trajectory of the real minimum wage looks like:

Another Minimum Wage Proposal

Figure 1: Federal minimum wage in 2020$ (black), under Romney-Sinema proposal, assuming 4 year phase in (red), and Sanders proposal (teal). NBER defined recession dates and NBER peak shaded gray. Quarterly CBO CPI projections interpolated by quadratic match. Source: BLS, CBO (February 2021), NBER, author’s calculations.

If the minimum wage is raised to $11 in June 2024, then the real wage will match that last seen in February 1980.

CBO has just revised their interactive tool for evaluating minimum wage proposals.

Menzie Chinn
He is Professor of Public Affairs and Economics at the University of Wisconsin, Madison

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