Minnesota’s Economic News – W/E 4/16/21
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In 2014, the city of Seattle, Washington became the first city to incrementally increase its minimum wage from $9 to $15 by 2021. Since then multiple cities and states have followed suit in implementing minim wage increases phased over a period of time. On November 3, Florida will give a chance to its residents to vote on an Amendment that will raise the state’s Minimum wage if passed. The Amendment aims to raise the state’s minimum wage to $10 per hour beginning September 30th, 2021. The minimum wage will then rise each year by $1 and $15 per hour by 2026.
There is a lot of evidence that points to how detrimental raising the minimum wage is to the economy; it hurts small businesses and low-income workers. Just last year The Congressional Budget Office published a report that analyzed how raising the federal minim wage would affect their economy. In their findings, the CBO estimated that while raising the minimum wage to $15 would lift 1.3 million Americans out of poverty, it would also lead to a loss of 1.3miliion jobs. This is in addition to all the other extra effects raising the minimum wage has on the economy.
And even more specifically, a new study by Florida Tax Watch has documented how the new wage would hurt small businesses as well as low-skilled workers in Florida.
According to the Tallahassee-based watchdog’s analysis, the proposed Amendment 2 on the Nov. 3 ballot would raise salaries for 3.1 million existing jobs but cost state businesses a projected $7.3 billion by 2026.
“While the road to a $15 state minimum wage may be paved with good intentions and even produce wins for some workers, its negative impacts could produce poor outcomes for too many of the very folks it aims to protect,” FTW President and CEO Dominic Calabro said Tuesday.
“Small businesses will be forced to increase labor expenditures, fixed-income Floridians will be faced with paying higher prices for goods and services, and low-skill workers are likely to receive fewer hours and employment opportunities,” he said.
This is definitely not a particularly good time for states to raise the minimum wage. Small businesses are hurting and unemployment is high. Businesses are currently focused on cutting costs to stay afloat. Most of them will not be able to rehire their employees and will take a long time to recover. Using the pandemic to force businesses to pay their workers more will not help them or the economy in any way.
But even if this was a time of economic growth, there is no evidence that suggests raising the minimum wage is ever a good idea. If the people of Florida care about their economy they should look at all the evidence showing how detrimental raising the minimum wage is on small businesses and low skilled workers. Focusing on the good intentions behind this policy will not make any of the harmful effects disappear.