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New England NFIB: POTUS and the Govs make Minimal Sense on Minimum Wage

Date: March 05, 2014

(March 5, 2014) – The takeaway from today’s campaign-style event in Connecticut, featuring President Barack Obama, Governor Dannel Malloy (CT), Governor Deval Patrick (MA), Governor Peter Shumlin (VT) and Governor Lincoln Chafee (RI) is that all of them seem to believe that shrinking small business is somehow the way to grow the American economy, said the National Federation of Independent Business (NFIB).

 

“Connecticut’s economy has lagged the national economy in terms of job creation and growth, and it’s highly unlikely that another big increase in labor costs will improve that condition,” said Andrew Markowski, NFIB Connecticut State Director.  “The best way for the President and Governor Malloy to increase wages is to create the conditions under which workers are in higher demand.  An arbitrary increase in labor costs will have the opposite effect.   It will inflate labor costs all the way up the scale and that will result in fewer jobs and higher consumer prices.”

 

Bill Vernon, NFIB State Director for Massachusetts and Rhode Island, pointed out that job growth in both of those states has been painfully slow for more than a decade and that higher mandatory labor costs won’t help.

 

“Rhode Island has one of the highest unemployment rates in the country and Massachusetts has had nearly zero net job growth for a decade,” he said.  “These governors know that small businesses can’t absorb higher labor costs without corresponding growth in sales.  It’s not a realistic policy.  It’s bound to cause job losses, especially at the bottom of the pay scale.  And it’s certain to damage the respective reputations of these states as places to open and run a business.”

 

NFIB Vermont State Director Shawn Shouldice said Governor Shumlin’s argument for raising the minimum wage, published recently on CNN.com, makes very little economic sense.

 

“He’s basically pointing to The Gap and other major corporations as an example for the rest of the country,” said Shouldice.  “But 96 percent of Vermont employers are small businesses and many of them can’t keep up with The Gap, or Costco or any of the Governor’s favorite corporations.”

 

President Obama appeared today at Central Connecticut State University in New Britain as part of a national campaign to raise the minimum wage.  He said today that doing so would improve the economy by giving low-wage workers more money to spend.

 

“With all due respect to the President I can’t think of very many economic predictions that he’s made that have actually materialized,” said Markowski.  “He made similar predictions about the stimulus and they fizzled.  He did the same thing on green energy, banking reform and, most obviously, health care.

 

“His problem is that he’s arguing against common sense.  Small business owners can’t wave a magic wand and increase their sales, reduce their taxes, reduce their health premiums and reduce their other expenses to make up for a big increase in labor costs.  In fact, only the federal government can print and borrow money without limitations.  Small businesses can’t do that.”

 

To learn more about NFIB please visit www.nfib.com.

 

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