Raising the U.S. federal minimum wage to $10.10 an hour, as President Barack Obama and Democrats in Congress are proposing, could result in about 500,000 jobs being lost by late 2016, the Congressional Budget Office (CBO) estimated on Tuesday.

The non-partisan CBO also said that increasing the hourly wage could reduce U.S. budget deficits by a small amount for several years, but then increase them slightly in later years.

The current federal minimum wage in the U.S. is $7.25 an hour.

Democrats who control the U.S. Senate could try to advance minimum wage legislation as early as next month.

The CBO report, which also looked at the impact of raising the minimum wage to $9 an hour instead of $10.10, said either step would lift many out of poverty.

A $10.10 minimum wage would bring 900,000 people above the poverty threshold of $24,100 a year for a family of four. That figure would be 300,000 people with a $9 minimum wage, CBO said.

Families in poverty would see a total $5 billion increase in real income at $10.10 and $1 billion under a $9 wage, CBO estimated.

Altogether, 16.5 million workers would see their earnings rise with a $10.10 wage, while 7.6 million would benefit with a $9 wage, according to the CBO report.