Current law is resulting in higher costs, fewer jobs, and hindering business growth
AUGUSTA, March 18, 2019 – As a series of bills on the minimum wage get a hearing in the state Capitol today, NFIB will testify that recent and pending increases in the state’s wage threshold are causing hardship for small businesses and their employees. NFIB represents thousands of small businesses across Maine, and it is calling for a slower phase-in of the next minimum wage increase to $12 in January 2020 so that those companies can better adjust to the steep series of increases.
The pending $12 minimum wage translates to a 33 percent increase since 2017, or $6,700 in added wages and payroll taxes for each minimum wage job. NFIB’s small business members were recently surveyed on the impact the current and scheduled increases which were initially brought about by a ballot initiative, Question 4.
“We are hearing from small business owners that they have had to raise prices, tighten up payroll, and they will be cutting some entry-level jobs,” said David Clough, state director of NFIB in Maine. “These family businesses and entrepreneurs are having to make tough choices with the state’s rising labor costs, and it will only get worse when the $12 minimum wage kicks in early next year.”
When asked about the impact of Maine’s higher minimum wage and the increase next January, small business owners explained that they were forced to additionally raise the wages of those making more than the minimum so more experienced employees wouldn’t feel devalued. They say the increases will prevent them from hiring inexperienced or unskilled workers in the future. Instead, they are asking more experienced employees to take on additional duties.
“The problem is it will be very difficult for people trying to get their first job as those entry-level positions disappear,” added Clough. “There is only so much money coming into a small business, and when you can’t afford the increased wages, you either have to raise prices or cut hours and jobs.”
NFIB’s members did state they have already been forced to raise the cost of services or goods to compensate for the current minimum wage. Beyond higher payroll costs, they experienced higher FICA taxes and workers’ compensation premiums.
