CBO: Minimum Wage Hike Could Cost Jobs, Raise Incomes

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The non-partisan Congressional Budget Office estimates that a popular Democratic plan to raise the minimum wage could reduce total employment in the U.S. by about 500,000 workers.

The new CBO report out Tuesday indicated that raising the minimum wage from $7.25 to $10.10 an hour would likely result in more that 16.5 million people seeing a pay bump by 2016. But it also calculated that such a hike could result in a range "between a very slight reduction in employment and a reduction in employment of 1.0 million workers."

Republican lawmakers seized on the numbers, calling the report evidence that raising the minimum wage would be bad for the economy.

"This report confirms what we've long known: while helping some, mandating higher wages has real costs, including fewer people working," said Brendan Buck, a spokesman for House Speaker John Boehner. "With unemployment Americans' top concern, our focus should be creating - not destroying - jobs for those who need them most."

The White House countered in a blog post that the CBO data doesn't reflect the findings of other prominent researchers who argue that raising the minimum wage would not mean significant job losses.

"These estimates do not reflect the overall consensus view of economists which is that raising the minimum wage has little or no negative effect on employment," wrote Jason Furman, the chairman of the Council of Economic Advisers, and colleague Betsey Stevenson.

"This is not businesses cutting back on jobs," Furman said on a separate conference call with reporters. "This is people having new choices they didn't used to have. Those are two completely different things in terms of the impact it has on people."

Democratic Minority Leader Nancy Pelosi said that critics are taking the report out of context.

“No matter how the critics spin this report, the CBO made it absolutely clear: raising the minimum wage would lift almost one million Americans out of poverty, increase the pay of low-income workers by $31 billion, and help build an economy that works for everyone," she wrote.

President Barack Obama pushed for the minimum wage hike to $10.10 per hour during his State of the Union speech in January.

According to the CBO, a minimum wage hike to $9.00 an hour would have less of an effect on employment, only resulting in the loss of an estimated 100,000 workers by 2016. CBO also gave a "likely range" for that as well, saying the a $9.00 minimum wage hike could result in a "very slight increase" in workers, to as much as a loss of 200,000 workers in 2016.

NBC's Stacey Klein contributed.