NFIB Research on the Raise the Wage Act Raises Concerns for Small Business

Date: February 21, 2019

According to NFIB’s Research Center, the Raise the Wage Act would negatively affect the U.S. economy.

On Thursday, Feb. 07, House lawmakers held a hearing to weigh the effects of raising the federal hourly minimum wage.

As proposed by House Education and Labor Committee Chair Bobby Scott (D-Va.), the Raise the Wage Act, H.R. 582, would increase the hourly wage from the current $7.25 to $15 by 2024.

While some on the Committee claim that more than doubling the federal minimum wage will be good for workers, businesses, and the economy, according to the NFIB Research Center’s recent study, Economic Effects of Enacting the Raise the Wage Act on Small Businesses and the U.S. Economy, the Raise the Wage Act would lead to massive job loss, lost production, and income reduction on a national scale.

If passed, there would be approximately 1.6 million fewer jobs in the United States in 2029 nationwide. For businesses with fewer than 500 employees, the Raise the Wage Act would eliminate more than 900,000, or 57 percent of all private sector jobs. For businesses with fewer than 100 employees, nearly 700,000 jobs will be eliminated, or about 43 percent of all private sector job losses.

A one-size-fits-all federal minimum wage policy is a blunt instrument that is ill-suited to address slow wage growth among low-income workers across states with a large variance in average incomes and the cost of living,” the study notes. “In principle, an increased federal minimum wage has the potential to have relatively larger negative impacts on state economies with lower costs of living than state economies with higher costs of living … The reasoning of policymakers in these states to apply policies appropriate to localities with diverse costs of living is analogous to the argument that federal minimum wage policy should reflect differences in state costs of living.”

The House is expected to mark up the legislation the coming weeks. NFIB will continue to track this bill and inform and educate members.

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