Vote no on Amendment 2 and explore better alternatives

Nowis theworst possible time for a 75% increase in Florida’s minimumwage.

Florida’s unemployment rate was 11.3% in July, the latest monthly statistics provided by the Department of Economic Opportunity. According to a Florida StateUniversity survey released in June, one-in-six state businesses have closed for good due to COVID-19. The state’s restaurant, retail and tourism industries, which employ an overwhelming number of entry-levelworkers and operate on razorthin profit margins, have been hit particularly hard byCOVID-19 as people stay home and have less disposable income.

Everyonewants to help entry-level employees, but there are better alternatives than the proposed constitutional $15 an hourwage floor. Florida’s Amendment 2 would exacerbate economic pain for employers and employees alike.

Last year, the nonpartisan Congressional Budget Office estimated that a $15 minimum wagewould cost 1.3 million jobs nationwide. Asurvey of Florida businesses by the Employment Policies Institute finds that half of the respondentswould reduce their employees’ hours to contend with the costs associated with a $15 entry-levelwage. Onethirdwould automate jobs. Anew analysis by economistsDavidMacpherson andWilliam Even estimates that, if passed, Amendment 2would cost the state 158,000 jobs.

In otherwords, a $15 entrylevelwage slashes the first rung off the career ladder, which lessskilled employees quickly climb as they learn on-the-job skills such as customer service and tracking inventory. Most entrylevelworkers earn awage increase within their first few months on the job. I’ve witnessed this career learning curve innumerable times first-hand as theCEOof Sergio’sRestaurants in South Florida.

The track record of $15 minimumwages in other cities is poor. According to a blockbuster 2017University ofWashington study, Seattle’s $15 minimumwage reduced jobs, hours and earnings of the people itwas trying to help. Howdoes a minimumwage increase reduce pay? Becauseworkers received fewer hours in the aftermath. Dr. DavidAutor, a topU.S. labor economist at MIT, praised the study, saying it had the power “to change minds” on the minimum wage issue.

Daycare providers, which also run on thin profit margins, have especially suffered under a $15 minimumwage. Like restaurants, they can’t simply pass on the associated costs to customers in the form of higher prices. Parents and diners are price sensitive. Seniors, who often lived on fixed incomes, are particularly vulnerable to minimumwage hike-induced price increases. A website called Facesof15.comhas aggregated countless real-world victims of the $15wage floor. The stories of lost jobs and closed small businesses are heartbreaking.

Yet, just because Amendment 2 is the wrongmove in practice and theory doesn’t mean that the spirit behind it is misguided. Everyonewants higherwages for those who need them most. We just disagree on the best strategy to achieve this shared vision.

One popular minimumwage alternative that enjoys bipartisan support is the Earned IncomeTaxCredit (EITC), which supplements employees’ incomes through the tax code, rewardingwork without distortionary economic effects. Each year, the EITC lifts almost nine million Americans out of poverty, including five million children. Yet according to the IRS, one-in-five eligible EITC recipients in Florida don’t claim their benefit. Raising awareness of thiswage supplement is an easy first step to helping lessskilledworkers. Proposed state-based EITC programs, which most other states already have, could aid theseworkers even more.

Amarket-based solution that I have suggested iswage transparency. This effort calls on employers to publish their entry-level wage rates so that employees and other businesses can compare them, bidding them up. Employees can more easily “shop around” for higher-paying job opportunities under this transparentmodel. And employers, whowant to reduce employee turnover, can raise theirwages to match their competitors.

Businesseswould face a strong incentive to join such a transparency compact to ensure they’re paying high enoughwages to prevent their employees frombeing poached. Employers could also more easily attract quality employees fromtheir competitors who are paying less. In addition, employerswould be motivated to addmore health and retirement benefits to attract and retain employees. Thewage transparency solutionwould also be tailored to the cost of living differences across the state.

Amendment 2’s constitutional $15 minimumwage increasewould hurtworkers more than itwould help. But expanding the EITC, promotingwage transparency and coming together to repair the COVID-19-ravaged economywould boost incomes without side effects. Let’s vote “no” on Amendment 2 and explore better alternatives instead.