Like Nevada Legislature’s recent passage of an increase, it will do nothing to alleviate poverty
CARSON CITY, Nev., July 17, 2019—On the eve of tomorrow’s first big Congressional vote on the so-called Raise the Wage Act, the state director for Nevada’s largest small-business association today posed the same question to U.S. House members as she did to Nevada legislators, who recently increased the rate by 75 cents an hour starting July 2020: Is a minimum-wage increase necessary at a time when finding employees is the problem and keeping the ones you have requires boosting salaries far above minimum wages?
“This is the hottest economy in our lifetime, thanks to the Tax Cuts and Jobs Act, which reduced taxes on small-business owners, allowing them to create more jobs, raise wages, and expand their enterprises,” said Randi Thompson, Nevada state director for the National Federation of Independent Business. “Nevada’s annual private-sector employment growth was more than 4% during 2018. Employment in small businesses with less than 100 employees totals nearly 651,000, which is a record high for the state. These companies aren’t national chains that can absorb pay increases across thousands of stores. These are locally owned businesses in competitive markets that have small profit margins. A mandated pay increase will force them to cut back on workers’ hours, and even lay some of them off.”
Particularly irksome to Thompson is the willful disregard by proponents of ever higher minimum wages as to who really earns the rate and their belief that it alleviates poverty. “If you look at the annual studies published by the Bureau of Labor Statistics, only 2 percent of Americans are minimum-wage earners, and almost all of them are either unskilled or teens and young adults looking for their first job. And, as economist David Neumark, one of the nation’s leading authorities on the minimum wage, puts it, ‘… evidence simply does not provide a strong case for using minimum wages to reduce poverty.’ Economist Joseph Sabia feels the same as Neumark, writing ‘Advocates of increasing the minimum wage to $15 have argued that such a hike will alleviate poverty and reduce public expenditures on means-tested public benefits. But a review of the literature on the effects of past minimum wage increases on poverty provides little support for these claims. The vast majority of poor individuals and individuals on welfare do not work part-time or full-time and will not gain from increases in the minimum wage.’ We do know minimum-wage increases have little to no positive effect,” continued Thompson, “but that is not to say they have no effect at all. Indeed, they can be positively destructive on an economy.”
In a letter to U.S. House members, NFIB President and CEO Juanita Duggan wrote, “The Raise the Wage Act will eliminate hundreds of thousands of small business jobs. The non-partisan Congressional Budget Office confirms that this legislation will damage the small business economy, estimating that 1.3 million workers will become jobless and total real income will be reduced by $9 billion by 2025. NFIB’s own Research Center estimates this legislation will cost the economy 1.6 million jobs, reduce real GDP by over $980 billion, and reduce economic output by more than $2 trillion by 2029 …
“… Small businesses employ nearly half of the private-sector workforce. More than doubling the federal minimum wage over a short period will have real and significant consequences for small business owners and employees.”
Keep up with the latest on Nevada small business at www.nfib.com/nevada or by following NFIB on Twitter @NFIB_NV
For more than 75 years, NFIB has been advocating on behalf of America’s small and independent business owners, both in Washington, D.C., and in all 50 state capitals. NFIB is a nonprofit, nonpartisan, and member-driven association. Since our founding in 1943, NFIB has been exclusively dedicated to small and independent businesses and remains so today. For more information, please visit nfib.com.
National Federation of Independent Business/Nevada
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