Tens of thousands of jobs would disappear with higher minimum wage, study says.
How does a loss of nearly 40,000 jobs sound to you?
If the nation were to impose a new federal minimum wage of $15 per hour, 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.
“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.
In Oregon, the new three-region minimum wage law went into effect on July 1, 2016, raising the minimum wage to $9.50 or $9.75 per hour depending on the region. By the summer of 2022, the schedule of mandated increases will be fully implemented, with the Portland-metro region’s rate of $14.75 per hour being the highest wage in the state. Every year thereafter, each of the three regions will see increases based on the federal Consumer Price Index.