You don’t hear a lot about the state minimum wage, and with good reason.
Most employers pay at least the federal minimum wage and most pay more. Even in a weak economy there’s still competition for good people.
Still, any talk of raising the minimum wage is cause for concern. While such a proposal may have good intentions, it would inevitably hurt the very people it’s meant to help. Raising the minimum wage inevitably hurts young people, first-time workers and those with no or limited skills.
Writing in The Wall Street Journal shortly before the federal minimum increased to $7.25 an hour, University of California-Irvine economist David Neumark said:
“Despite a few exceptions that are tirelessly [and selectively] cited by advocates of a higher minimum wage, the bulk of the evidence — from scores of studies, using data mainly from the U.S., but also from many other countries — clearly shows that minimum wages reduce employment of young, low-skilled people.”
Of course, what he and other researchers have found through their research is what small-business owners have learned from experience: When you have to pay more for labor, you can’t afford to hire as many people.
In its most recent survey on small-business optimism, my association — the National Federation of Independent Business — found that small-business owners are finally starting to feel better about the economy. While hiring still may be weak, more and more small-business owners see a light at the end of the tunnel.
What would raising the state’s minimum wage do for now? It would throw cold water on small business just as things are beginning to look up.
That would be bad, because small business is the engine that drives Georgia’s economy. It accounts for 98 percent of all employers in the state and employs 45 percent of Georgia’s private-sector workforce, according to new research from the U.S. Small Business Administration.
It has been my experience in dealing with small employers that they treat their employees like an extended family. Talk to just about any small-business owner. They will tell you that their most important asset is their people.
Employers want to offer good wages and benefits. When the government forces new mandates on them, it removes the flexibility they need to design compensation packages that work best for their individual situations.
While we all hope brighter days lie ahead for Georgia, we also know small business is looking at a lot of increased costs. Energy prices continue to increase, health insurance premiums remain on the rise, unemployment insurance costs are going up, workers’ compensation premiums are steadily increasing and small businesses are under the constant threat of new taxes from Washington. All of this in the face of an economic downturn and lower sales.
If we want to turn our economy around and put Georgians back to work, let’s cut the red tape, reform the tax code and unleash the free market. Let’s not smother our entrepreneurs with new costly mandates and higher labor costs.
Kyle Jackson is state director of the National Federation of Independent Business.
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