Kyle Jackson testified today before the Georgia Senate Insurance and Labor Committee on Senate Bill 15, a plan to raise the state minimum wage. Here is a copy of his testimony, as prepared:
Chairman Bethel, members of the Senate Insurance and Labor Committee, my name is Kyle Jackson and I am the state director for the Georgia chapter of the National Federation of Independent Business (NFIB/Georgia). Thank you for the opportunity to be here today to provide testimony and a small-business perspective on the legislation pending before you.
For those of you I don’t know, let me quickly speak to NFIB/Georgia and who I represent. We are the nation and the state’s largest small business advocacy organization with over 7,500 small employers around Georgia and roughly 350,000 small businesses nationwide. We are a member-driven organization in that before we take a position on any piece of state or federal legislation we poll or survey our members as to make sure the organization always represents the true position of small business. To that end, on our 2015 NFIB member ballot, 91% while only 6% supported increasing the minimum wage.
Our average member has less than 20 employees and does less than $ 1 million per year in gross sales. Our members are involved in just about every facet of our state’s economy. But if you were to ask just about any of them, the y would tell you a big part of any successful small business is their employees.
While we’re here to discuss the minimum wage today, I think it’s important that wages are only a portion of the total labor cost that comes with employing somebody. There are payroll taxes paid by employers, unemployment insurance, workers’ compensation insurance, health insurance, paid leave, etc. In my 12-plus years with NFIB, it has been my experience that most small employers treat their employees like a second family and do their best to make sure their employees are fairly compensated, to the point that in just about every small business, the business owner is the last person to be paid. And when times are tough and the economy is down as it has been since the end of 2007, sometimes the business owner doesn’t get paid at all.
I also think it is important to denote the difference between Main Street and Wall Street. Proponents of increasing the minimum wage will point to the excesses of Wall Street, record earnings reports, golden parachutes, etc., but you won’t find any of that on Main Street. In fact the recovery seen on Wall Street has lagged when it comes to the small business sector. NFIB Research Foundation surveys show many small employers, particularly in the Southeast continue to struggle with lower than expected sales and haven’t yet recovered to pre-recession levels.
In addition, the minimum wage has much less impact on large, Fortune 500 companies and much more impact on the small employers in your districts. The reason? Small employers have less ability to absorb new costs, be they in the form of new regulations, taxes, health insurance mandates and government-mandated labor increases. There’s only so much money to go around and when the state or federal government mandates a cost increase somewhere, that has an effect somewhere else. It could mean a business owner has to cut benefits like health insurance, or vacation days, or sometimes it means an employer will have to cut hours or simply not hire a new employee. That’s counter-productive when we’re relying on Georgia’s small employers to get people back to work.
Aside from the very legitimate concerns small employers have with respect to almost doubling the minimum wage, let’s look at the actual efficacy of raising the wage on the very people it’s intended to help, the working poor. In a 2012 study by University of Georgia Assistant Professor of Housing & Consumer Economics Robert Nielsen and co-authored by University of San Diego State University Professor of Economics (a summary of which I’ve attached to my testimony) they found that as a policy tool, the minimum wage fails to do what its supporters intend, reduce poverty and help the working poor. In fact, they found most minimum wage earners aren’t the family “breadwinners” and they aren’t considered to live at or below the poverty line. Eighty-seven percent of the beneficiaries of the last federal increase in the minimum wage lived in household with incomes at least twice that of the poverty threshold. To compound the problem of using the minimum wage as a tool to fix poverty, they also found half of Americans age 16 to 64 living at or below the poverty line don’t work, so raising the minimum wage be it to $10.10, $15 or whatever amount you chose won’t help those folks anyway.
We have a problem with poverty in this state and in this country and we all have a vested interest in addressing this pressing issue. Unfortunately, we focus more on the political football of the minimum wage while we should be focusing on more proven poverty-reducers like the Earned Income Tax Credit and the most important thing; job training and job skills. Raising the minimum wage while doing nothing to better prepare people for the workplace and not getting them those crucial skill sets which make them eminently more employable, and at a much higher wage scale would be a Pyrrhic victory. I think the kinds of policy that will go much further in addressing the skills and wage gaps in this state are approaches like that found in Senate Bill 2, which NFIB/Georgia was proud to support, and which the senate passed unanimously. Preparing Georgians for a career and teaching them a skill is the exact kind of approach that will help move this state forward and will help workers as well as employers.
Chairman Bethel and members of the committee, I appreciate the opportunity to be here today to discuss this issue. I have no doubt Sen. James’ heart is in the right place in introducing this legislation. But I would urge you to reject this approach to helping Georgia’s working poor and let’s come together and focus on bi-partisan approaches that will yield actual results and not hinder small businesses’’ ability to create jobs. I would be happy to answer any questions.
