Minimum wage hike felt more keenly in labor-intensive industries

Posted on July 24, 2009

LAURY HAMMEL’S supportive claims about the minimum wage ignore the wide range of industries that are disproportionately affected by mandated wage increases (“Business owners support living wage,’’ Letters, July 14).

Hammel’s assertions may be true for his fitness clubs (a capital-intensive operation structure), but they do not address the wage pressures felt by employers in labor-intensive industries where employees are needed at every level of operations.

In the restaurant industry, for example, salaries and benefits make up close to 60 percent of a typical restaurant’s costs. According to fitness industry sources, total payroll and benefits comprised 43 percent of gyms’ expenses in 2007. A business already running on tight margins will feel the effects of a mandated increase in labor costs much more severely when its operations are mainly labor-intensive.

Hammel may claim his business is unaffected, but the experience of one company in one industry is hardly a match for decades of empirical research showing a direct relationship between job losses and minimum wage hikes, particularly among vulnerable groups such as minority teens and adults without a high school diploma.