D.C. Democratics want to see the federal minimum wage raised to $10.10 an hour, although the labor unions and other activists don't like the idea; it's insufficient, as far as they're concerned. They want at least $15 an hour.
There are, however, significant downsides to that idea, especially for those who work in small businesses.
For one thing, since worker's compensation insurance payments are tied to payroll, a large increase for unskilled workers means a big hit for the business as a whole - in some cases, an increase by as much as a third or more.
Lee Spectator wrote: “I start most of my new hires at minimum wage, then, based on their performance, give them a raise within their first 30 to 60 days. I give merit raises based on performance [and] annual performance reviews….With a $15 per hour minimum wage, that would go away. I would have no room to pay them any more, and they would have no incentive to work harder.”
With increased wage expenses also come higher taxes and workers-comp insurance. These would balloon to nearly 48 percent of Spectator’s total business expenses, he says.
We've talked about how such increases are likely to push retailers - particularly in the service industries - toward automation, and actually work to cut jobs and/or hours for low-skilled workers, but it seems clear that that would be the case even absent automation. Moreover, those fortunate enough to be employed full-time today would likely see other benefits go away, such as paid vacations and subsidized health insurance.
It's either that, or the businesses fold, taking their jobs with them.
And where does it stop? Is a $20 minimum sufficient? That seems improbable; if the agitators have their demands met, they'll simply demand more. That, I'm afraid, is an historical fact.