This really shouldnâ€™t be news to anyone. But a new survey shows that if Congress raises the minimum wage, businesses will put off hiring and some would be forced to pay off workers. Itâ€™s simple math, really. Companies have to keep to budgets, as well.
â€śJust over half of U.S. businesses that pay the minimum wage would hire fewer workers if the federal standard is raised to $10.10 per hour, according to a survey by a large staffing firm to be released Wednesday,â€ť the Wall Street Journal reported last week. â€śAbout 54 percent of minimum-wage employers would reduce hiring if the federally mandated rate increased by $2.85 per hour. A smaller share â€” 38 percent â€” said they would lay off employees if the wage increase favored by President Barack Obama becomes law.â€ť
The poll was conducted by Express Employment Professionals, a large temp firm. Some in Congress immediately responded with questions about the pollâ€™s fairness, but it confirms what the Congressional Budget Office estimated last month.
â€śA report from the nonpartisan Congressional Budget Office, released last month, found a jump to $10.10 per hour would cost the U.S. about 500,000 jobs by the second half of 2016,â€ť the Journal pointed out.
Those arenâ€™t the only studies that show the economic reality of the presidentâ€™s proposal.
â€śIncreasing the minimum wage nationwide to $10 per hour would lead to substantial job losses among retail, service and manufacturing firms, according to U.S. chief financial officers,â€ť a Duke University/CFO Magazine Global Business Outlook Survey found. â€śAmong firms that indicated whether a wage hike would affect their hiring, nearly half of retail firms (47 percent) and approximately one-third of service and manufacturing companies said they would reduce jobs if the minimum wage rose to $10.â€ť
And last fall, a Wells Fargo/Gallup found the same thing â€” if companies are forced to increase employee pay, theyâ€™ll be forced to decrease employee numbers.
The conclusion here is clear. A mandatory minimum wage hike sounds great, until you look at the effects of Congress giving people a raise with someone elseâ€™s money.
â€śSo, for some workers, sure, the higher minimum wage will be nice,â€ť said Katrina Trinko of the Heritage Foundation. â€śBut for plenty of other workers â€” for example, those who would prefer to make the current minimum wage of $7.25 an hour rather than nothing at all â€” Obamaâ€™s minimum wage hike is a lousy deal.â€ť
President Obama said in a Dec. 13, 2013 speech that thereâ€™s no proof a wage hike would cost jobs.
â€śNow, we all know the arguments that have been used against a higher minimum wage,â€ť he said. â€śSome say it actually hurts low-wage workers â€” businesses will be less likely to hire them. But thereâ€™s no solid evidence that a higher minimum wage costs jobs, and research shows it raises incomes for low-wage workers and boosts short-term economic growth.â€ť
Hereâ€™s the solid evidence â€” from survey after survey, economist after economist. Raising the minimum wage will raise labor costs on businesses that can ill afford those costs. And that will cost jobs.