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
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.
For more information about
NFIB, please visit www.nfib.com.