Opinion: Raising the minimum wage will reduce jobs in New Hampshire

Lawmakers are considering a bill to increase the minimum wage by 24 percent over the next 18 months and mandate automatic future increases.  They’re doing so despite that no one anticipates corresponding economic growth.  Why, then, do supporters believe that employers can absorb a sharp increase without having to make painful adjustments?

For many families this is not an academic question.  According to the Bureau of Labor Statistics there are 30,000 small businesses in the state.  These are typically family-owned businesses and most have fewer than 20 employees.  Many depend on hourly workers, including minimum wage workers.

An increase in the cost of labor will force them to make cuts.  Remember, they can’t waive a wand and increase their sales by 24 percent.  If they raise their prices they’ll lose customers.  And they have little control over other expenses like taxes, insurance or supplies.  What they can control is the number of people whom they employ and the hours they work.  Both will be reduced.

Economics confirms this.  David Neumark of the University of California, Irvine, for example, has studied the research for decades.  Most, he says, links the minimum wage to job losses.  The Congressional Budget Office made a similar conclusion recently when it predicted that a federal increase would eliminate 500,000 jobs.  The reason is obvious.  Higher cost means lower demand.

Supporters claim that raising the rate is a family issue.  The data says something else.  According to BLS only 1.4 percent of all hourly workers in New Hampshire, about 5,000 people, makes $7.25.  Only 1.6 percent of never-married adults (25 and over) and less than one percent of married adults earns the minimum wage.

The truth is that minimum wage workers are typically teenagers and young adults working part time.  They’ll be the ones to suffer.  Minimum wage jobs are intended for inexperienced workers who can learn the skills, responsibilities and work habits necessary to climb the ladder.  This proposal will make it harder to hire them.

But they won’t be the only victims.  Small business owners are working people too, a fact that is rarely acknowledged by the activists.  They’ve risked their money and worked harder than anyone else.  As a result they’ve created jobs for others.  Running a business is how they make a living and this mandate will make that harder.  Such a policy is neither fair nor smart.

Bruce Berke is New Hampshire State Director for the National Federation of Independent Business (NFIB)

Author: Bruce Berke

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