Study: Mandatory Minimum Wage Increase Will Lead To Layoffs, Hiring Freeze
March 21, 2014 by Ben Bullard
Nearly 40 percent of U.S. employers will lay off workers to offset operational costs if President Barack Obama is successful in persuading Congress to raise the Federal mandatory minimum wage, according to the Nationâs largest private staffing service.
A study released Wednesday by Express Employment Professionals indicates 38 percent of businesses that hire minimum-wage workers will scale back their existing workforce if they have to accommodate a Federally mandated hike in the minimum wage. An additional 54 percent said they would cease or reduce hiring, while 65 percent said a minimum wage hike would force them to pass along the cost of the added payroll by raising the prices of the products and services they offer.
Among all businesses, including those that do not pay minimum wage, 19 percent responded that they would lay off some employees, while 39 percent said they would scale back hiring. And 51 percent said they would pass along the cost of doing business — even though they hire no minimum wage workers — by raising prices.
âWhen the minimum wage is increased, it puts pressure on all companies to increase pay for their entry level employees, even for companies that presently pay above the current minimum wage of $7.25/hour,â Express Employment Professionals explained in its survey summary. âIn effect, entry level pay will rise to $10.10 an hour and workers at or slightly above that level will also seek pay raises since they previously made more than the minimum wage. Therefore, costs can increase even for companies that donât currently pay the minimum wage.â
Obama has focused on a nationwide minimum wage increase as one part of his overall agenda to close the gap between the Nationâs wealthiest and poorest working residents. âRaising the minimum wage wouldnât just raise their wages — its effect would lift wages for about 28 million Americans,â the President said in February. âIt would lift millions of Americans out of poverty and help millions more work their way out of poverty without requiring a single dollar in new taxes or spending.â
He has also described a forced minimum wage increase as a catalyst for a âvirtuous cycleâ of government-led altruism that can be carried out in the private sector.