NFIB Minnesota Disappointed by Minimum Wage Deal

Date: April 07, 2014

St. Paul (April 7, 2014) – The state’s major small business group, the National Federation of Independent Business (NFIB), representing more than 13,000 members in Minnesota, today expressed deep disappointment with a minimum wage deal announced today by legislative leadership that would increase the rate incrementally to $9.50 per hour in 2016 and put future increases on autopilot.

“Unfortunately, the Senate conceded to the House on the two biggest issues, raising the wage for most employers to $9.50 per hour and adopting an escalator provision that will increase the wage every year starting in 2018,” said NFIB Minnesota State Director Mike Hickey

He noted that the legislation does allow the Commissioner of the Department of Labor and Industry to suspend the escalator for one year if leading economic indicators point to a substantial downturn in the economy.

“We do appreciate the concern for very small businesses that will pay a lower wage under the legislation of $7.75 per hour starting in August of 2016.  But unfortunately that is subject to the escalator also,” said Hickey.  “We also appreciate the 90 day training wage of $7.75 per hour for 18 to 19 year olds and the same lower wage for all 16 and 17 year olds and other students under a J-1 visa.  It was encouraging to see there was concern for small business in that a lower wage was mandated on the smallest businesses.”

Minimum wage is one of the most frequently studied issues in economics.  University of California economist David Neumark has reviewed the data stretching back decades and finds that 80 percent of the studies show job losses as a result.  The nonpartisan Congressional Budget Office most recently predicted that more than half a million jobs would disappear as the result of a federal proposal to raise the rate to $10.10 per hour.

“Raising the cost of anything reduces the demand for it,” said Hickey.  “The same rule applies to labor.  If we significantly raise the cost of entry-level labor employers will find ways to avoid hiring new workers.  They’ll cut hours or other benefits, or they’ll automate some functions to avoid hiring people.”

“Low-wage jobs have always been stepping stones for people just entering the workforce,” he said.  “Raising the minimum wage will price some of them out of the job market and they’ll be robbed of the experience they need to learn the skills and work habits necessary to climb up the ladder.”

It will also make it harder for small business owners to make a living in Minnesota, he said.

“The advocates are always referring to working people and they unfairly exclude small business owners from that category,” said Hickey.  “Small business owners very often pay themselves little to get their businesses off the ground or to keep the doors open when things are tough.  An arbitrary increase in the cost of labor makes it harder on them.

“Ultimately that makes Minnesota less attractive as a place to start and run a business,” he continued.  “That hurts all of us because it weakens our economy.

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