A government report found that if the US raised the minimum wage to $15 an hour it would eliminate 1.3 million jobs - but also lift 1.3 million Americans out of poverty

minimum wageProtesters calling for higher wages for fast-food workers stand outside a McDonald's restaurant in Oakland, California December 5, 2013. REUTERS/Noah Berger

  • Raising the federal minimum wage to $15 an hour by 2025 would shed 1.3 million jobs from the economy but also reduce the number of Americans living in poverty by the same amount, according to a report the nonpartisan Congressional Budget Office released on Monday.
  • The federal minimum wage was last raised in 2009, and last month marked the longest period in the nation's history without any increase, according to the Economic Policy Institute.
  • Worker's paychecks have largely not grown alongside the American economy and inflation over the last decade, which corroded the federal minimum wage's buying power.
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Raising the federal minimum wage to $15 an hour by 2025 would shed 1.3 million jobs from the economy but also reduce the number of Americans living in poverty by the same amount, according to a report the nonpartisan Congressional Budget Office released on Monday.

The report states that a $15 minimum wage hike would "boost workers' earnings through higher wages, though some of those higher wages would be offset by higher rates of joblessness." Around half of all laid-off workers would be teenagers.

It says that instituting a $15 an hour wage would reduce business income while raising prices through higher labor costs that would be passed on to consumers - though wealthier people would feel more of the price increases.

"All consumers would pay higher prices, but higher-income families, who spend more, would pay more of those costs," the CBO report says.

Read more: 20 years of government data says raising the minimum wage could be good for workers, businesses, and the economy

The CBO report examined the impact of raising the federal minimum wage from its current point of $7.25. It was last raised in 2009, and last month marked the longest period in the nation's history without any increase, according to the Economic Policy Institute.

Worker's paychecks have not grown alongside the American economy and inflation over the last decade, which has corroded the federal minimum wage's buying power by 17%. For a full-time minimum-wage worker employed year-round, that represents a loss of $3,000 in annual earnings.

Other research from the Economic Policy Institute also shows that a single parent making $7.25 an hour to support their family through full-time work will come up around $1,815 short of crossing the 2017 federal poverty line of $16,895 for a single-parent family.

The inaction at the federal level has spurred action in state legislatures and city halls to raise the wages on their own over the last decade. 29 states and Washington, DC have enacted state-level minimum wages that are higher than the federal one, according to data from the US Department of Labor.

Read more: The minimum wage is set to increase in 21 states and DC in 2019 - here's what it will be in every state

Raising the hourly minimum wage to $15 an hour is a proposal that nearly all the Democratic presidential candidates have endorsed, arguing it will lift Americans out of poverty. It's a position mirrored by House Democrats, who have introduced a bill sponsored by Rep. Bobby Scott of Virginia that would phase in a $15 minimum wage over the next five years and tie future increases to inflation.

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