Small business support for minimum wage hike not what meets the eye

Original Article:

  • Author: Michael Saltsman

  • Publication Date: September 2015

  • Newspaper: Bangor Daily News

  • Topics: Minimum Wage

What can a sex shop owner tell us about Maine’s $12 minimum wage proposal?

A fair amount, according to the left-wing Maine Small Business Coalition. The coalition included the owner — and sole employee — of Presque Isle’s Twisted Knickers on its petition of 150 business owners who support the 60 percent wage hike that activists are trying to place on next year’s ballot.

It’s a story tailor-made for the press: Small business owners, who seemingly would have the most to lose from the dramatic wage hike, instead are throwing their support behind it. But a closer look at the hard evidence on this topic — not to mention the other businesses on the coalition’s list — reveals that the story is little more than a PR stunt.

Among the signers are a self-described “internationally renowned storyteller,” a self-employed guitar teacher, the board president of a left-wing think tank, a self-employed videographer, an acupuncturist, a woodworker and a horse dentist. (Who knew horses needed dentists?) While these business owners no doubt are valuable members of their community, they’re not exactly the foremost authorities on how the minimum wage proposal would affect a typical small business in Maine with a payroll.

More credible sources on the topic suggest a less-beneficial effect from the wage hike. A new analysis of Maine’s $12 minimum wage proposal, which would raise the wage floor to $12 in 2020, released this week and written by economists at Miami and Trinity University, concludes that 3,700 jobs would be lost in the state if it takes effect.

This finding is in line with the experiences of real small businesses in parts of the country that already have experienced dramatic wage hikes. In Oakland, for instance, which increased its minimum wage to $12.25, 10 small businesses in the Chinatown neighborhood alone have closed their doors as at least a partial result of the hike.

In the city’s economically disadvantaged neighborhoods, multiple child care businesses have had to cut staff hours and child care spots, citing the wage increase as the driving reason. And several restaurants across the city have been forced to lay off staff or dramatically increase prices. Similar effects have occurred in other West Coast cities that recently have increased their minimum wages, as well.

The economists’ findings also are in line with the vast majority of economic research, including two summaries of decades of minimum wage studies and the nonpartisan Congressional Budget Office’s 2014 report, on whose methodology the Maine study was based, which conclude wage hikes cost jobs. Even researchers at the University of California-Berkeley — researchers who have a long history of advocating for higher minimum wage — suggest that a $12 minimum wage could harm Maine jobs, according to the Portland Press Herald.

For the most part, Americans get this. Minimum wage advocates claim to have public opinion on their side, citing polls that show around 75 percent of national respondents support a $12 wage, but when the real-world effects are explained, support plummets. A recent Employment Policies Institute poll conducted by ORC International shows that only 41 percent still support a $12 mandate after they learn the consequences.

Instead of taking minimum wage proponents’ dubious claims at face value, Maine voters, policymakers and journalists should talk with service-industry business owners who will be substantially impacted by this law. This will give them and the public a far better understanding of the potential impact of the minimum wage hike of employers — and employees — than listening to the isolated tune of a one-man band.