Concord (May 6, 2014) – The political push to raise the state minimum wage by 24 percent is a solution in search of a problem that would drive up costs for small business owners and make it harder for workers on the bottom of the ladder to climb any higher, said the National Federation of Independent Business (NFIB) today.
“It is not possible to increase the demand for hourly workers, which everyone in Concord claims as a goal, by making it more expensive to hire hourly workers,” said NFIB State Director Bruce Berke. “We’re asking Senators who support this bill to take a second look at the issue and weigh the facts more heavily than advocates’ emotional pleas.”
The Senate is expected Thursday to vote on a bill that would raise the state minimum wage from the federal level of $7.25 hour to $8.25 per hour by next year and to $9 by 2016. That would amount to a 14 percent increase initially and a 24 percent increase over the next 18 months. Moreover, the bill would mandate automatic annual increases after 2016 based on inflation.
Supporters of the increase call it a matter of fairness that full-time working adults earn more than the poverty level. But according to the federal Bureau of Labor Statistics (BLS), only 3.5 percent of hourly workers in New Hampshire earn the minimum wage or less (Table 3) and well over half of those are tipped employees who typically earn substantially more than $7.25 per hour. Also according to BLS (Table 9), only 0.6 percent of full-time workers – less than one percent of people working 40 hours per week -- earn the minimum wage.
“They are describing this as a middle-class crisis and that is completely inconsistent with the facts,” said Berke. “Only a small fraction of workers earns the minimum wage and most of them get a raise within a year and usually within a few months because it is, after all, a training wage. It isn’t intended to support a middle-class lifestyle.”
While raising the minimum will help very few families, it will hurt small businesses that depend on entry-level labor and make it harder for them to create jobs for young and first-time workers, said Berke.
“The advocates imagine that small retail or service businesses, like the ones that dominate our tourism industry, can somehow pay the same wages as larger corporations,” he said. “They can’t possibly survive if they are forced to operate under that model.
“Since they can’t raise their prices without higher demand, many will find a way to do more with less. Research predicts that some of the workers whom the supporters claim to care about will have their hours cut and other applicants will never be hired because small businesses will have to find ways to cut costs. That means fewer jobs or hours for the youngest workers with the lowest skills. Small businesses in New Hampshire will be hurt and so will some of the people whom the advocates claim to want to help.”
Berke said that New Hampshire should allow other states to follow the political crowd and focus instead on creating a better climate for small businesses to start, grow and hire.
“The surest way to create prosperity for more people is to encourage more business formation in New Hampshire,” said Berke. “Raising the minimum wage and then putting it on autopilot would create a barrier to new businesses and new jobs. That’s not what we need.”
Learn more about NFIB at www.nfib.com.