Minimum Wage Increase to $15 per Hour

Legislators in the House and the Senate introduced legislation, the Raise the Wage Act, to raise the federal minimum wage $15.00 per hour by 2024 and annually increase the federal minimum wage in subsequent years. NFIB opposes H.R. 582, the Raise the Wage Act and will Key Vote H.R. 582 for the 116th Congress.

Small business owners know that more than doubling the federal minimum wage will lead to increased labor costs and tough choices. They must either increase the cost of their product or service, which in many cases is not feasible, or reduce labor costs elsewhere. The reduction in labor costs would be achieved through reduced jobs, reduced hours, and/or reduced benefits. None of these changes benefit employees.

NFIB opposes the Raise the Wage Act because 92 percent of NFIB members opposed its mandates. NFIB urges small business owners to contact their Members of Congress to oppose the Raise the Wage Act.

The NFIB Research Center recently released a study,“Economic Effects of Enacting the Raise the Wage Act on Small Businesses and the U.S. Economy,“ on the impact of the Raise the Wage Act on the economy and small businesses. The study found the following:

National Landscape: According to the NFIB Research Center’s economic forecast, the Raise the Wage Act would lead to massive output loss, job loss, and income reduction on a national scale.

• The cumulative real output loss would exceed $2.0 trillion with cumulative real GDP loss exceeding $980 billion over the ten year forecast window.


• If the bill becomes law, there would be more than 6 million fewer jobs in the United States in 2029.


• Americans will have $103 billion less in disposable personal income in 2029.


• The act would reduce the number of able bodied individuals participating in the labor force by more than 615,000 individuals in 2029.

Small Business Landscape: Small businesses would be particularly hurt by the Raise the Wage Act.

• More than 900,000 jobs lost, or 57 percent of all private sector job losses, would be at companies with fewer than 500 employees.


• Nearly 700,000 jobs lost, about 43 percent of all jobs lost, would be at businesses with fewer than 100 employees.


• The negative impact of the proposed legislation would fall disproportionately on small employers which are less likely to have the cash reserves or profit margins to absorb the increase in labor costs than larger businesses.

Industry-Specific Landscape: The employment reduction in retail, food service, and administrative support account for nearly one quarter of lost jobs.

• The retail trade industry is forecast to have more than 162,000 fewer jobs by 2029.


• Food services and drinking places would have more than 165,000 fewer jobs by 2029.


• Administrative and support services would see a decline of more than 85,000 jobs by 2029.


• The forecast reduction in employment of the three industries combined is more than 392,000 lost jobs by 2029, approximately 24 percent of total forecast jobs lost.

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State–by–State Minimum Wage Update

Here’s a nationwide look at the pending and passed proposals

Small business owners know that when cities and states raise the minimum wage, it often leads to increased labor costs and tough choices. To reduce costs following a minimum wage hike, employers are often forced to make difficult decisions such as cutting jobs, reducing employees’ hours, or reducing benefits.

NFIB members visited Washington, D.C., in July to talk about a bill to raise the federal minimum wage. In addition to the federal legislation, many local governments are considering similar plans to raise the minimum wage in cities and states across the nation.

NFIB research has shown this is a bad move for the small business economy, as does a recent study by the Congressional Budget Office. Here’s an update on where these laws stand across the country.

 

Trending Tactics

Over the years, proponents of a higher minimum wage have increasingly turned to ballot initiatives when they haven’t been able to secure victory through the legislature. Their focus also has broadened to include localities.

For example, several major cities–such as Seattle, Chicago, and San Francisco–have mandated minimum wage increases on their own, and Colorado recently passed legislation to allow local governments to establish their own minimum wages.

 

Measures That Took Effect This Year

According to the National Conference of State Legislatures, 18 states began 2019 with higher minimum wages, either because of automatic cost-of-living increases (*) or previously approved legislation or ballot initiatives (^). However, state wages may differ depending on business size or gross earnings. If you own a business in California, Minnesota, Missouri, Montana, New York, or Ohio, visit your state’s government work force or labor website for details.

 

Below are current state rates and the cause of increase for those 18 states:

Alaska*: $9.89
Arizona^: $11
Arkansas^: $9.25
California^: $12
Colorado^: $11.10
Florida*: $8.46
Maine^: $11
Massachusetts^: $12
Minnesota*: $9.86
Missouri^: $8.60
Montana*: $8.50

New Jersey*: $8.85
New York^: $11.10

Ohio*: $8.55
Rhode Island^: $10.50
South Dakota*: $9.10
Vermont*: $10.78
Washington^: $12

 

Additionally, Michigan’s minimum wage increased to $9.45 on Mar. 29. On July 1, Washington, D.C.’s minimum wage will increase to $14. Oregon’s minimum wage will increase to a standard rate of $11.25 for most of northwest Oregon, $11 for nonurban counties, and $12.50 for Portland Metro. Delaware’s minimum wage will increase to $9.25 on Oct. 1.

New Increases on the Horizon

So far in 2019, six other states–Illinois, New Jersey, New Mexico, Connecticut, Nevada, Maryland–have passed new increases.

• Illinois: The hourly minimum wage rise to $9.25 on Jan. 1, 2020; $10 on July 1, 2020; and an additional $1 per hour every Jan. 1 through 2025 until the state’s minimum wage hits $15.


“The majority of our members are very concerned about the eventual impact the 80 percent wage hike will have because they know this will force all hourly wages to increase,“ said NFIB’s Illinois State Director Mark Grant.

“Even those who pay far more than minimum wage know that costs for other services and products are going to rise. Some are making plans to relocate part or all of their business to another state, while others are considering closing their business.“

• New Jersey: For most employers, New Jersey’s minimum wage will rise $1 per hour starting July 1, 2019 and continue to increase every Jan. 1 until the minimum wage reaches $15 in 2024.

  
  
• New Mexico: The state’s base wage will increase to $9 on Jan. 1, 2020; $10.50 on Jan. 1, 2021; $11.50 on Jan. 1., 2022; and $12 on Jan. 1, 2023.



• Connecticut: The hourly minimum wage will increase to $11.00 on October 1, 2019; $12.00 on September 1, 2020; $13.00 on August 1, 2021; $14.00 on July 1, 2022; and $15.00 on June 1, 2023.

  
  
• Nevada: The hourly minimum wage will increase by 75 cents each year starting Jan. 1, 2020, raising the current wage to $9; $9.75 on Jan. 1, 2021; $10.50 on Jan. 1, 2020; $11.25 on Jan. 1, 2023; $12 on Jan. 1, 2024.


• Maryland: The minimum wage will also rise to $15 through gradual increases by 2025 for businesses with at least 15 or 2026 for businesses with fewer than 15 employees.

Unlike some other states, the increases differ by business size. “;Our members have been saying this will throw a wrench in their plans to hire additional workers,” NFIB’s Maryland State Director Mike O’Halloran says. ”Many of them are also reconsidering their workers’ schedules and benefits.“

The Debate Continues

Finally, while 32 total states have introduced legislation in 2019 to increase their minimum wage, two–Maine and New Hampshire–currently have active pending measures.