By: Jordan Wilson
On November 8, Raising Florida’s Minimum Wage Amendment received approval to appear on the 2020 ballot. The amendment, if passed, will raise the minimum wage to $15 an hour in Florida by 2026.
With public opinion favoring the passage of the amendment, it is time to examine the impact of the proposed amendment. Those in favor believe raising the minimum wage will provide a “living wage” for all working Floridians. Despite the noble intent, raising the minimum wage by such a large amount would hurt small business owners and workers who cannot produce services at that rate.
Small businesses account for 44% of U.S. economic activity and about two-thirds of net new jobs created. One of the greatest expenses for an employer is employee wages. As a result, small businesses and their consumers would feel the pinch of raising the minimum wage. Small business owners would be 12% more likely to default on loans, as expenses would increase according to researchers at Georgia Tech. If businesses cannot pass the increased cost on to consumers, they may be forced to close their establishments or reduce their workforce.
The Congressional Budget Office reports that raising the minimum wage to $15 an hour could result in 1.3 million people losing their jobs nationwide. This will affect low-skilled workers the hardest. With the increasing expense, employers would look to eliminate many entry-level and low skilled positions. Many fast food restaurants have already reduced their workforce with the use of technology as cashiers are being replaced with touch-screen kiosks. Unfortunately, an increase in minimum wage does not correlate to higher salaries either. In a study by the University of Washington examining Seattle’s minimum wage increase, researchers found that while wages for low-skill workers rose by 3%, hours worked decreased by 7%.
An important American value is ensuring that people receive an adequate paycheck to support themselves and their family. Unfortunately, raising Florida’s minimum wage to $15 per hour risks the livelihood of small businesses and low-skilled workers. There needs to be a comprehensive and pragmatic approach for increasing workers wages while supporting small business owners and protecting low-skilled workers. Raising the minimum wage would economically marginalize some groups at the expense of others.
