Raising the federal minimum wage to $12 per hour could reduce private sector employment by 1.8 million jobs over 10 years and cut economic output by $2 trillion, according to a new report recently released by the National Federation of Independent Business (NFIB).
“While both presidential candidates expressed support for raising the minimum wage, it’s important for voters to understand the consequences,” said NFIB/CA State Executive Director Tom Scott. “Raising the minimum wage to $12, without any connection to the economy or business conditions, has the potential to devastate small businesses and wipe out nearly two million jobs.”
Scott pointed out that neither President Elect Donald Trump nor Secretary Hillary Clinton were asked about raising the minimum wage in any of the presidential debates.
“This is a very important issue that deserved more serious discussion from all candidates running for federal office this year,” Scott added.
“It is also important to point out that this NFIB report assumes an increase in the federal minimum wage to $12 per hour phased in by 2019, and then increased every year thereafter based on inflation. However, California is already on track in statute to reach $12 per hour by 2019, and eventually $15 per hour by 2022. Therefore, here in California, the devastating economic impacts are not theoretical, but rather certain for our already struggling small businesses,” Scott continued.
Small businesses would be affected disproportionately. According to the NFIB research, 57% of the jobs that would disappear would come from small businesses.
Raising the minimum wage to $12 per hour would also limit economic output, according to the research. Fewer jobs mean fewer workers producing goods and services. Economic output would be lowered by trillions of dollars as a result of a $12 federal minimum wage, the study predicts.
“Economic growth has been dismally low for years,” said Scott. “A 65% federal increase in labor costs for small employers could push the economy over the edge. This is a very big issue, and it deserved a much brighter spotlight before voters went to the polls.”