Just over half of U.S. businesses that pay the minimum wage would hire fewer workers if the federal standard is raised to $10.10 per hour, according to a survey by a large staffing firm to be released Wednesday. But the same poll found a majority of those companies would not cut their current workforce.
About two-thirds of employers paying the minimum wage said they would raise prices for goods or services in response to an increase, the survey by Express Employment Professionals found. About 54% of minimum-wage employers would reduce hiring if the federally mandated rate increased by $2.85 per hour. A smaller share—38% — said they would lay off employees if the wage increase favored by President Barack Obama becomes law.
The poll, designed to gauge businesses’ reaction to the wage increase, marks the latest effort by businesses and groups on both sides of the issue to shape a heated debate about whether increasing pay for workers at the bottom will help or hurt the U.S. economy.
A report from the nonpartisan Congressional Budget Office, released last month, found a jump to $10.10 per hour would cost the U.S. about 500,000 jobs by the second half of 2016. But the study said the increase would also lift 900,000 Americans out of poverty by boosting incomes for the working poor. The CBO study reviewed the work of a range of economists.
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% said they would let employees go as a result of the wage increase and 39% said future hiring would be reduced.
“The response shows that some businesses will certainly lose employees and many will not be hiring as much, if the minimum wage goes up,” Express chief executive Bob Funk said in an interview. “In a time of weak job growth like we’ve had recently, this is not the right time for a wage hike.”
Though Mr. Funk said he thinks a minimum-wage increase would hurt the overall economy, he said his firm could actually benefit because it would take a share of the higher wages paid to the workers it places. Wednesday’s survey from Express is not the company’s first report to challenge a key piece of the president’s agenda. Last year, the company published a paper arguing the Affordable Care Act would reduce job creation and erode the number of people working in full-time jobs.
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%.
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% 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% of small-business owners said they would reduce their current workforce in response to a minimum wage increase to $9 per hour.
President Obama called on Congress more than a year ago to raise the minimum wage to $9 per hour. Earlier this year, as part of a strategy to combat income inequality, he embraced legislation introduced by Sen. Tom Harkin (D., Iowa) and Rep. George Miller (D. Calif.) to increase the minimum wage in stages to $10.10 an hour and index it to inflation afterward.
Published by The Wall Street Journal
Article Link: http://blogs.wsj.com/economics/2014/03/19/minimum-wage-increase-could-slow-future-hiring-employment-survey-shows/