A $15 Minimum Wage in Oklahoma is a Recipe for Disaster

Original Article: https://www.oklahoman.com/story/opinion/2024/01/22/opinion-guest-raising-minimum-wage-tends-to-hurt-most-vulnerable-workers/72161366007/

  • Author: Rebekah Paxton

  • Publication Date: January 2024

  • Newspaper: The Oklahoman

The fate of Oklahoma’s hospitality industry may soon be in the hands of its people. A proposed ballot measure would raise the minimum wage to $15 an hour, spelling disaster for the state’s businesses and tens of thousands of employees. It could be voted on as soon as November 2024.

On its face, this “one size fits all” policy seems like a great solution to combat inflation by putting more money in the pockets of hand working Oklahomans. But in practice, this couldn’t be further from the truth.

Raising the minimum wage tends to hurt the most vulnerable workers. In fact, the passage of Initiative Petition 446 would put over 12,000 jobs at risk in Oklahoma, according to economists from Miami and Trinity Universities. About 70 percent of these employees would be under the age of 25 – meaning young workers could have their careers cut short just as they’re getting started.

Small businesses, the backbone of Oklahoma’s economy, would face an inordinate burden under the proposed wage hike. Considering these mom and pop shops make up over 99 percent of the state’s business landscape and employ over half of the state’s workforce, that’s no small impact. An overwhelming majority of economists believe a $15 minimum wage would be a huge hurdle for small businesses to overcome.

Even for employees who manage to escape layoffs and business closures, their employers may be forced to scale back their scheduled hours. A Harvard Business Review study revealed that for every $1 increase in the minimum wage, the average number of hours worked per week plummeted by approximately 21 percent. This grim reality translates into fewer shift opportunities and more understaffed workplaces, where employees bear the brunt of the burden.

Despite the higher hourly wage, a study by researchers at the University of Washington found that a wave of minimum wage hikes in Seattle caused total employer payrolls to shrink due to reduced employee schedules. This stark reality underscores the potential for minimum wage increases to erode, rather than enhance, workers’ financial stability.

A $15 minimum wage increase would also jeopardize employees’ access to health benefits. The same Harvard Business Review study indicated that substantial minimum wage hikes decreased the number of employees working more than 30 hours per week, rendering them ineligible for healthcare benefits. Another University of Chicago study found that every $1 wage hike in California caused a one-percentage-point decrease in employer-sponsored health insurance for employees.

Businesses in nonurban areas will suffer more than their urban counterparts. A study by the Heritage Foundation found that instituting a $15 minimum wage in more rural parts of the country would be like enacting a $35.74 minimum wage in the nation’s capital.

Even in Oklahoma City, businesses are continuing to struggle, especially after the pandemic. Many are still serving less patrons as people work remotely and office buildings remain vacant. Imagine how a wage hike would impact even more rural areas if one of the state’s most vibrant cities is struggling to keep up with rising costs of doing business.

Oklahomans deserve smart policies that encourage job creation. Initiative 446 is a recipe for disaster for employees and small businesses.