CBO Score: Eliminating 14(c) Will Cost Jobs
The Congressional Budget Office released an evaluation of the Budgetary and Econ omic Effects of S.2488, The Raise The Wage Act Of 2023. Since this bill includes a provision to phase out and eliminate 14(c) compensatory wages, the report includes a section on the negative effects of this provision.
The CBO report concludes that "the increase in earnings (per affected worker) from a higher minimum wage would be larger for workers who would not become jobless, but the larger mandated wage increases would cause larger increases in joblessness. The increase in joblessness might also be relatively large because the disabled workers affected by this section are less productive".
The report goes on to state, "Under current law, employers of section 14(c) workers are required to establish that workers’ wages are commensurate with their productivity. Thus, the lower wages those workers earn indicate that they tend to be less productive.. Employers who are trying to maximize profits would respond to an increase in the minimum wage by first laying off the least productive workers." (emphasis added)
It is important to note that this is the only time the Congressional Budget Office has evaluated the effects of eliminating 14(c) programs, and that their conclusion was that this would result in many of those participating in these programs losing any employment opportunities. Previous CBO scores on similar bills have not included information about the resultant job losses for 14(c) participants.