Gov. Terry Branstad has suggested the Iowa Legislature consider “a modest increase” in the state’s minimum wage. A review of the best research, published by the Federal Reserve Bank of San Francisco, confirms that even a modest increase can have a major impact on job opportunities for less-skilled job seekers.
Iowans could look at Johnson County, which raised its minimum wage to $10.10 on Jan. 1, for proof. The Orange Leaf, a frozen yogurt shop in North Liberty, closed its doors, telling one local news station that it “couldn’t keep up with Johnson County’s minimum wage.” The owner of another business, the Popcorn Shoppe, worries he’ll also close due to increasing costs and a rough business environment.
Instead of raising barriers to job creation, Iowa should learn a lesson from its counties’ experiments and look to reduce them.