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The Metropolitan Airports Commission just adopted the disastrous $15 minimum wage ordinance for an already ailing airline industry

On Monday, October 19th the Metropolitan Airports Commission (MAC) approved an ordinance that will increase the hourly minimum wage for the Minneapolis-St. Paul International airport workers to $15 by 2022. According to the Minneapolis-St. Paul Business Journal,

The stepped increase to $15 begins Jan. 1, when the airport’s hourly minimum will rise to $13.25. It goes to $14.25 on July 1 of next year before reaching $15 an hour on July 1, 2022.

That’s the same date the minimum hits $15 for the largest employers in Minneapolis and St. Paul, which have both adopted citywide minimum wage ordinances in recent years. Some employers, including Minneapolis Target Corp. (NYSE: TGT) and Richfield-based Best Buy Co., Inc. (NYSE: BBY), have already raised their starting wage to $15 an hour.

This is roughly similar to ordinances passed by the cities of Minneapolis and St. Paul’s that will see a gradual increase in the minimum wage for workers. Employers like Target have already raised their minimum wage to $15.

The MAC already knows raising the minimum wage is bad for businesses

According to the report by the Minneapolis-St Paul Business Journal, the plan to raise the minimum wage for airport workers did not just blossom suddenly. In fact “the MAC  has been studying the minimum wage hike for a year and had been on track to adopt the higher-level months ago, but was delayed by the pandemic”.

Due to the coronavirus, there has been a tremendous drop in travel. This has impacted revenue for the airport and the businesses that operate in the airport terminals, forcing the MAC to set the issue aside. But even without the impact of the coronavirus, businesses were already going to struggle to adopt a higher minimum wage.

The MAC next month is scheduled to act on a long-term financial relief framework for the concessionaires who operate terminal shops, bars and restaurants. Some were already asking for help adjusting to a higher minimum wage before the pandemic dealt a heavy blow to airport foot traffic.

So, in an unsurprising twist, the MAC plans to take on extra steps to ensure that businesses survive the new wage. And that may include raising costs on consumers.

The MAC has already waived more than $24 million in fees it would’ve collected from those vendors since the second quarter of this year. Long-term relief solutions could include more fee waivers, lease extensions or the option to add a surcharge to customers’ bills

The airline industry has been hit hard by the coronavirus. So, it made immediate sense for the MAC to table minimum wage discussion to a later period. However, even now the industry is ailing. And when these raises kick in, the effect on businesses will potentially still be amplified.

This is however not to say that there is ever a good time to decide on whether or not to raise costs on businesses and make it hard to hire people. Raising the minimum wage is generally disastrous to small businesses. The coronavirus induced recession has just made the plight much worse for small businesses. It is very shortsighted of the MAC to overly burden businesses at a time like this. Regardless of their intention on workers, raising the minimum wage will still raise costs for businesses and potentially lead to lost jobs.

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