Report: Minimum Wage Increases Will Lead to Jobs Hit

Low-wage, low-skill workers hardest hit

November 2, 2016

Proposed minimum wage increases on the ballot in the states of Arizona, Colorado, Maine, and Washington could lead to the loss of some 290,000 jobs, according to a report from the American Action Forum.

On Nov. 8, voters in Arizona, Colorado, and Maine will consider increasing the minimum wage to $12 per hour, and voters in Washington will consider increasing it to $13.50 per hour by 2020. Currently, the minimum wage is $8.05 in Arizona, $8.31 in Colorado, $7.50 in Maine and $9.47 in Washington.

"While proposals to raise the minimum wage are well intended, it is important to take into account the negative labor market consequences," the report says.

According to research conducted by Texas A&M and the Massachusetts Institute of Technology, when the minimum wage is increased by 10 percent, the increase correlates with a 0.3 to 0.5 percent decline in job growth.

"In Arizona, Colorado, and Washington, these ballot initiatives if successful would mandate a 39.5 percent, 32.3 percent, and 35.1 percent increase in each minimum wage, respectively," the report states. "In Maine, the ballot initiative would mandate a massive 60 percent increase in the statewide minimum wage."

The study calculates that these minimum wage increases would lead to job losses totaling 89,733 in Arizona, 73,001 in Colorado, 27,982 in Maine and 99,066 in Washington for a grand total of 289,782 job losses by 2023.

"While initiatives to raise the minimum wage are popular, it is important to understand that they have a cost," the report states. "The low-wage, low-skill workers who labor advocates want to help are the very workers who bear this cost, as hundreds of thousands would be unable to maintain their current job or attain a new one."

Proposition 206, the ballot initiative in Arizona seeking an increase in minimum wage, has been met with criticism.

"Proposition 206 should be called the Opportunity Destruction Act," said Lea Marquez Peterson, the Tucson Hispanic Chamber of Commerce president and CEO. "If passed, Proposition 206 will hurt the very Arizonians that the initiative's proponents claim to want to help."

"Proposition 206 will leave job creators with no good options," she said. "The dramatic increase will force many businesses—particularly small businesses—to reduce employee hours and staff levels, stop hiring or, as we've seen in other places that have instituted dramatic mandated wage hikes, close altogether."

Published under: Minimum Wage