NFIB/Minnesota Warns Committee that Higher Minimum Wage will Cost Jobs, Slow Economy

Date: February 27, 2014

St. Paul (February 27, 2014) – The National Federation of Independent Business (NFIB) will tell members of a key legislative committee this evening that a measure they’re considering to raise the minimum wage to $9.50 per hour will increase payroll costs beyond what some small businesses can absorb without cutting jobs, hours or employee benefits.

“This proposal would substantially increase the cost of labor for small businesses and without a corresponding increase in sales revenue they will have to make cuts,” said NFIB Minnesota State Director Mike Hickey.  “This is a well-intended piece of legislation that will have negative consequences for Minnesota’s economy and for low-wage workers.”

Hickey cited a report issued last week by the non-partisan Congressional Budget Office (CBO), which predicted a loss of 500,000 jobs if a similar proposal is enacted at the federal level.

“That should be a warning signal to Minnesota that raising the minimum wage will do more harm than good,” he said.  “A much better way to help the working poor and low-income Minnesotans is to encourage economic growth that will increase the demand for low-skilled labor.

“Small businesses form the backbone of our economy and it’s not possible to impose on them the kind of payroll structure that is more common among multinational corporations and large industrial companies,” he continued.

The legislation under consideration this evening would mandate future increases in the minimum wage tied to inflation, a provision that Hickey said makes it especially worrisome to small business owners.

“There is not a small business in Minnesota that can expect sales growth every year forever,” said Hickey. “If this bill passes small business owners will never have a chance to catch up to the automatic increases in their labor costs.”

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