Survey: Minimum Wage Hike Will Slow Down Hiring

The 40 percent wage hike touted by the Obama administration would slow hiring and drive up prices for consumers, according to a new survey released Wednesday.

A survey of business owners taken by Express Employment Professionals (EEP) and first reported by the Wall Street Journal found that 38 percent of minimum wage employers expect to lay off employees if the $10.10 minimum wage is adopted. More than half of respondents said they would slow or reduce hiring. The negative effects of the wage increase would extend beyond the service sector, which makes up the bulk of minimum wage employers, according to the survey.

The staffing firm’s survey of about 1,200 companies, conducted last month, found that a wage increase would alter hiring plans for a sizable share of all employers including those that don’t have minimum-wage workers. Among all businesses polled, 19 percent said they would let employees go as a result of the wage increase and 39 percent said future hiring would be reduced. [...]

The Oklahoma City firm, which caters to mostly small- and medium-sized businesses, said increasing the minimum wage would put upward pressure on labor costs for all employers because workers who earn close to $10 per hour also would seek raises if the bottom level was increased by almost 40 percent.

EEP polled more than 1,200 business owners and executives in February, just as the non-partisan Congressional Budget Office (CBO) prepared a report stating that the hike could eliminate up to 1 million jobs. The Obama administration has disputed those findings with top economic officials telling reporters that the hike would not hinder hiring.

As the Washington Free Beacon reported in February:

 "Our view is that zero is a perfectly reasonable estimate of the impact of raising the minimum wage on employment," Council of Economic Advisers chairman Jason Furman said on a conference call with reporters shortly after the [CBO] report came out.

The CBO and EEP reports are the least of the White House’s worries, according to the Journal.

Results of the Express survey are roughly in line with other polls measuring business reaction to a minimum wage increase.

A Duke University/CFO Magazine survey of chief financial officers, released last week, found that 47 percent of retail firms and about a third of service and manufacturing companies would reduce jobs if the minimum wage rose to $10 per hour.

A survey from Wells Fargo and Gallup released in November found that 28 percent of small-business owners said they would reduce their current workforce in response to a minimum wage increase to $9 per hour.

The White House has continued to dismiss any reports that the minimum wage hike could hurt hiring—a trend that the majority of economic research demonstrates. While Obama officials have repeated the "no negative impact" talking point, they have had some trouble grasping labor statistics concerning the minimum wage.

Director of the National Economic Council Gene Sperling demurred when asked by a reporter how many workers actually earn $7.25 per hour. After a brief interlude, Sperling returned to the call, saying that "5 percent" of American workers earn the minimum wage. That figure, however, overstates how many workers earn the wage. The Bureau of Labor Statistics report often cited by the White House states own talking points state that only 3.6 million out of the nation’s 104.8 million workers earn the minimum wage, about 3.4 percent.

Sperling went on to say that the large hike "will not have any negative economic impact at all" while increasing wages for millions of Americans.

Published under: Minimum Wage