Study: Federal Minimum Wage Hike Would Cost Jobs, Hurt Economy

Date: October 20, 2016

NFIB Report Considers Effects Of Higher Minimum Wage As Both Clinton, Trump Indicate They Would Boost Wages

As Election Day nears, the small business community is more closely examining how policies proposed by both Hillary Clinton and Donald Trump might effect their businesses. One issue that is top-of-mind for many small business owners is the possibility of a Federal minimum wage hike. The Grand Junction (CO) Business Times reports that with Donald Trump saying “he would support a federal increase” of an unspecified amount and Hillary Clinton calling “for a $12 minimum wage,” the NFIB has issued a report examining the effects of a Federal minimum wage hike. The Times notes that the “report assumes an increase in the federal minimum wage to $12 per hour phased in by 2019 and then increased every year thereafter based on inflation.” In such a scenario, the NFIB found that “57 percent of the jobs that would disappear” as a result of the 65 percent increase in labor costs arising from a higher Federal minimum wage “would come from small businesses.” The Arkansas Democrat Gazette notes that specifically, the report found that “1.8 million private-sector jobs” would be lost over 10 years, and the $12 minimum wage “also would cut economic output by $2 trillion and have the biggest effect on small businesses.”

What This Means For Small Businesses

Small business owners can hardly afford the enormous labor costs associated with a mandatory Federal minimum wage hike. As NFIB President and CEO Juanita Duggan explained in the Elizabethtown (NC) Bladen Journal, “Small businesses rely heavily on entry-level, hourly employees. They will bear the brunt of the cost, and their employees will pay the price in the form of fewer jobs and fewer job opportunities.” She went on to elaborate, “A 65-percent increase in labor costs for small employers could push the economy over the edge. This is a very big issue, and it deserves a much brighter spotlight before voters go to the polls next month.”

Additional Reading

MRCTV also covers the NFIB’s report.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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