State Legislators Must Reject Increased Labor Costs for Rhode Island Job Creators

Date: March 02, 2018

A recently published op-ed by our NFIB RI State Director

The following editorial by NFIB Rhode Island State Director Christopher Carlozzi was recently published in the Providence Journal

The ink has not yet dried on the most recent law raising Rhode Island’s minimum wage, yet advocates are already preemptively pushing for the next hike to $15 per hour. Minimum wage just rose to $10.10 in January and a second increase is planned in 2019. But sponsors of this new legislation would more double the current planned increase and keep doubling them for five years straight. If their plan becomes a reality, small businesses will struggle to survive.

Small employers are already coping with two years of minimum wage increases and in July they will be saddled with more labor costs when a paid leave law takes effect. While a $15 minimum wage may seem, on the surface, like a good idea, there is strong evidence of unintended consequences that negatively impact the employee’s wallets. 

Seattle, an early adopter of a $15 minimum wage, released a study in 2017 after that city’s incremental increase to $13 per hour. It found that nine months after the second tier of wage hikes, about 5,000 low-wage jobs disappeared, the number of hours worked by low-wage workers dropped by 3.5 million hours, and their wages dropped by $6 million.

And, as entry-level and unskilled jobs disappear, it makes it especially difficult for young people and those lacking work experience to enter the workforce. A 2018 report on the decreasing number of teens in the workforce by George Washington University’s Mercatus Center, shows higher minimum wages significantly contribute to higher teen unemployment. The research determined higher minimum wages meant fewer job opportunities for young workers.

Since Rhode Island is one of only two states with time-and-a-half pay on Sundays, a $15 minimum wage means $22.50/hour wage for retail shops. This disproportionately high wage would almost guarantee no shop would schedule teens or unskilled workers for a Sunday shift.

A constant piling on of labor costs leaves small business owners with hard choices. Jobs can be eliminated, hours cut, and remaining employees asked to take on more duties. The latest Seattle study appears to confirm those were the choices employers were forced to make in order to keep their doors open.

Beyond increased labor costs, Rhode Island small businesses have very high energy costs, taxes, and double-digit health insurance premium increases. Just as the economy is beginning to pick up after years of stagnation, now is not the time for the state’s General Assembly to discourage business expansion and job creation by implementing a $15 minimum wage.




Related Content: NFIB in My State | State | Rhode Island

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