Minimum-wage increase would hurt economy, small business
On Thursday, my colleagues and I in the House will vote on H.R. 582 which, if enacted, will more than double the federal minimum wage from $7.25 an hour to $15.00 an hour. I strongly believe this bill would be disastrous for our economy.
The Congressional Budget
Office (CBO), a non-partisan agency tasked with providing economic information to Congress, recently estimated that this bill would cause up to 3.7 million people to lose their jobs. This is approximately the same number of people that live in the state of Oklahoma. Additionally, the same agency also estimated that for every one person brought out of poverty because of this bill, three people will lose their jobs.
While some workers may experience a pay increase under this law, the CBO also calculated that real family income (income adjusted for inflation) would decrease by $9 billion by 2025 if the $15 minimum wage is enacted. This means that overall Americans will earn less under the higher minimum wage imposed by this bill.
Beyond these economic reasons, there are several philosophical issues with this legislation.
First, we are a nation of separate states, and what may work in one state may not be the best for others. So far, seven states have enacted laws to implement a $15 minimum wage (among them New York and California). While the higher cost of living in those states may necessitate higher wages, this is not the case for most of Florida.
In fact, implementing a $15 minimum wage nationally has the real potential to harm Florida’s economy. One of the primary reasons businesses come to Florida is lower costs. If Florida is forced to adopt the same minimum wage as New York and California, this removes some of the financial incentive for businesses to come to Florida. This bill clearly has the potential to harm Central Florida and other Southern states to the benefit of Northeastern and Western states.
This bill also turns a blind eye to the free-market ideals that have guided us as a nation. Imposing a top-down doubling of the minimum wage prevents our neighbors from starting businesses and creating jobs, and prevents employees from cultivating skills they can use to demand higher wages.
This is particularly true for small businesses, the 99% of businesses that employ approximately 60 million Americans, according to the Small Business Administration.
Small businesses tend to be less capable of absorbing additional costs than large corporations. Therefore, if the minimum wage is doubled, thousands of small businesses will be forced to compensate for these costs. Unfortunately, some businesses will undoubtedly either lay off employees, reduce hours, or reduce employee benefits. In some cases, businesses will be forced to do all three.
When I started my own small business 13 years ago, it took everything I had to keep the lights on. I didn’t take a salary for a full year, choosing instead to invest in my business; and my wife Amie and I lived off equity we built up in our home. Even after we got the business up and running and brought on more staff, there were some months where I did not take a salary so I could keep all my employees paid.
Starting and running a small business is hard, but incredibly rewarding work. My employees became part of my family and, like my family, I wanted to give them every opportunity possible. Doubling the minimum wage prevents growth and robs people of the opportunity to not only find work, but also work their way to higher wages.
The author, a Republican, represents Florida’s 15th District in the U.S. House.