$15 Hourly Wage Will Clobber State Employment

Date: September 13, 2016 Last Edit: September 15, 2016

More than one hundred thousand jobs would disappear with higher minimum wage, study says.

$15 Hourly Wage Will Clobber State Employment

How does a loss of 107,000 jobs
sound to you?

That’s the projection of jobs lost
in the year 2021 relative to the employment that would have occurred had
Oregon’s minimum wage remained at 2015 levels, according to James Sherk of the Heritage Foundation. You likely have heard that the Minneapolis city council is considering an ordinance to mandate a $15 minimum wage across the city. 

“The policy would result in many states
losing hundreds of thousands of jobs and would considerably curtail employment
opportunities, especially for less-skilled workers,” said Sherk, research
fellow, Labor Economics Center for Data Analysis, at the foundation. “These
findings show that the federal government should not impose a $15 minimum wage
on states, and states should expect that adopting this policy would hurt many
workers.”

Nationally, about 7 million jobs would be
lost, about 6 percent of all full-time positions.

“Companies hire workers when the
additional earnings their labor creates exceeds the cost of employing them,”
Sherk said. “Starting wages of $15 per hour mean full-time employees must
create at least $38,700 a year in value for their employers [including wages,
employer payroll taxes, and Obamacare-mandate penalties].” 

This high hurdle, he added, would make it
very difficult for less-experienced and less-skilled workers to find full-time
jobs. “Many of these workers are not yet productive enough to create that much
value for their employers and businesses will not hire them at a loss,” he
said. 

In addition, a $15 hourly requirement
might cause businesses to cut positions, cut hours, use labor-saving technology
or even shut down or leave the United States.

“This process has already begun in
California,” Sherk explained. “Shortly after Los Angeles raised its city
minimum wage to $15 per hour, American Apparel eliminated 500 clothing
manufacturing jobs in the city. The Los Angeles Times reports the company
planned to relocate those jobs within California. After California raised
minimum starting wages statewide, however, American Apparel began examining
options to move production outside California.”

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