A recent Reminder editorial supporting an increase in the Massachusetts minimum wage needs more thought as to what the real impact would be, especially to small businesses for whom this could be the straw that breaks their backs forcing shutdowns or relocation to more small business friendly states. A proposed ballot question would increase the minimum wage from $8 an hour to $11 an hour. A minimum wage of $11 an hour represents an increase in labor costs of thirty-two and one half percent (almost 1/3) to small business owners! For many employees, this translates to less hours, layoffs, or both. |
These increases in labor cost will be offset by a corresponding reduction in the number of employees to maintain the business owners current labor cost. The alternative would be to increase pricing, but increases of those magnitudes would probably drive small business customers away. While it is true that larger companies such as Walmart could well afford to absorb the wage increases, they too would probably lay off some employees and pass most of the cost increase on to their customers.
This proposed increase will not result in the same quality of life benefits as Henry Ford’s decision to pay his factory workers enough so they could afford to purchase one of the vehicles they manufactured. Instead, it will probably result in more layoffs, the closing of some small businesses, and price increases to all regardless of the ability to pay more for the same goods and services.
And who would suffer the most? The current minimum wage employees who lose their job, and the “new minimum wage” employees that the increase was supposed to help, but find themselves no better off with higher prices resulting in a net decrease to their purchasing power.
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