A study released on Monday in the US said that the revised minimum wage in the US proposed by US President Joe Biden is likely to lift around 900,000 people out of poverty but also cost 1.4 million jobs, reported AFP. 

A report released by the Congressional Budget Office says that the increased wages in the US is likely to directly affect 27 million workers while highlighting that an increase in incomes will outweigh the losses in the process. 

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The Biden administration plans to gradually increase the minimum wage in the US from $7.25 to $15, a big leap promised by 2025. 

The last alterations in the minimum wage plan of the US were made in 2009, although some states decided to mandate their own wages. 

A substantial amount of people in the US have backed this decision citing the unequal impact of COVID-19 on non-white communities in the US and have called it a key step to solve the increasing income gap in the country. However, some have challenged the revised policy saying that it can damage the financial stability of small businesses. 

Biden acknowledged in a CBS interview last week that the $15 minimum wage probably would not be included in the $1.9 trillion economic relief package, but he said he remained committed to the issue, reported AFP. 

The report released by the CBO stated that the negative effects of the revised minimum wage can be a three-fold process which would start with an increase in product costs, leading to lower consumption and finally resulting in elevated unemployment.

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On the other hand, the increased wages are likely to increase the spending capacity of financially weaker families in the US which can result in a reduced “drop in employment for several years”. 

The study estimates net pay would jump $333 billion over a decade through 2031, with the $509 billion in higher wages, more than offsetting the $175 billion in lost wages due expected job cuts, reported AFP. 

A prominent US-based think tank called Economic Policy Institute called the CBO report “just wrong” citing numerous other reports which say otherwise.