A new Congressional Budget Office report says the Raise the Wage Act – the bill to gradually raise the federal minimum wage to $15 an hour by 2025 – would increase the cumulative deficit by $54 billion over 10 years.

Supporters of the minimum wage increase have hoped the report could bolster the case for including the measure in the next COVID-19 relief package.

The report analyzed the impact of the legislation if it were enacted at the end of March. The report found the wage hike would cost 1.4 million jobs by 2025. It would also lift 900,000 people out of poverty and increase wages for 17 million people. The CBO said a wage hike would also benefit many of the 10 million people who currently make slightly more than the minimum wage.

The CBO says the wage hike would lead to higher prices for goods and services, which would contribute to an increase in federal spending. While spending on nutrition programs would fall, spending for unemployment benefits, health care programs and Social Security would rise due to increased costs.

The CBO says Medicaid spending would increase, in part, because so many care workers would receive raises.

"We certainly hope they are right, and, since the costs are already accounted for in the cost estimate, we urge state policymakers to hold Medicaid services constant in the face of higher labor costs," said the Economic Policy Institute in a statement. "The care workforce provides extraordinarily valuable services yet is among the most underpaid in the economy, due largely to historical legacies of racial and gender discrimination. The pay increase this workforce would get under a higher federal minimum wage would be among the most valuable outcomes of making this law."

Biden's push for a wage increase

President Joe Biden has called for a minimum wage hike in his $1.9 trillion stimulus plan, but told CBS he does not think a minimum wage hike will ultimately end up in the relief bill.

Biden cited Senate rules that dictate what legislation can be passed through the budget reconcilation process, the mechanism that allows the Senate to pass legislation with a simple majority. Democrats are preparing to use the process to pass the next relief bill without any Republican support. In the interview, Biden said he is prepared to push for a minimum wage increase in a seprate proposal.

Despite Biden's outlook, Sen. Bernie Sanders (I., Vt.) said found it "hard to understand" the CBO's findings that the wage increase would add to the deficit, pointing to alternate studies that found a wage hike would reduce the deficit.

“The good news, however, is that from a Byrd Rule perspective, the CBO has demonstrated that increasing the minimum wage would have a direct and substantial impact on the federal budget. What that means is that we can clearly raise the minimum wage to $15 an hour under the rules of reconciliation," said Sanders in a statement.

The Senate parliamentarian will ultimately decide if the proposal can be passed under the budget reconciliation process.

Regardless, it could be difficult to build unanimous support among Democrats. Sen. Joe Manchin (D., W. Va.) has said he does not support increasing the minimum wage to $15 an hour.

Goldman Sachs' chief economist says a $15 an hour minimum wage is unlikely, but a $10-$11 an hour compromise could be more "politically realistic."

Yahoo Finance and the Harris Poll recently found Americans overwhelmingly support raising the minimum wage.

Jessica Smith is chief political correspondent for Yahoo Finance, based in Washington, D.C. Follow her on Twitter at @JessicaASmith8.

Read more:

• Congresswoman warns of surprise tax bills for unemployed workers if Congress doesn't act

• 83% of Americans say $7.25 minimum wage is not enough: poll

• GameStop saga revives calls in Congress for a financial transaction tax

• Congressman: Pass Biden's $1.9T stimulus plan with or without Republicans

• GOP Congressman: Give $1,400 stimulus checks to people who get the COVID-19 vaccine