Radio Address: Raising the minimum wage results in job losses
May 4, 2016
(MP3 Audio)As Mainers consider voting to raise the minimum wage, they should see what is happening in other states that have already raised it.
Hello, this is Governor Paul LePage.
California is the first state to enact a $15 minimum wage, and Governor Jerry Brown said it will put a lot of poor people out of work. I do not always agree with his liberal positions, but this time Brown is right. He stated that a $15 minimum wage would create ?major increased costs, estimated at more than $4 billion annually.? It would exacerbate a projected recession by raising operating costs for businesses and causing job losses.
The Federal Reserve Bank of San Francisco also released a report on the impact of minimum wage increases. It found research that shows minimum wage increases do result in job losses for low-skilled workers?the very people it is supposed to help. More importantly, it found that raising the minimum wage to $15 could have even worse effects than earlier research has suggested.
Socialists in Maine want to raise the minimum wage to $12. That is less than California, but it is still too much for Maine businesses to absorb.
We agree a modest increase in the minimum wage is necessary. However, going too far too fast will be disastrous for businesses and the workers they employ. According to the Bureau of Labor Statistics, restaurant employees work an average of 26 hours a week. In California, increasing the minimum wage from $10 an hour to $15 would result in an annual increase of $6,760 per employee. If a small restaurant employs 10 workers, it would face almost $70,000 in extra labor costs.
The same thing would happen in Maine. I told one woman that coffee shops would have to increase the price of a cup of coffee to cover the new labor costs. She disagreed responding: they just have to sell more coffee.
This basic misunderstanding of how business works is plaguing Maine. Socialists and liberals think business owners have plenty of cash stuffed under their mattresses or buried in the back yard. They want to compel these owners to sacrifice their profits to pay low-skilled people a high wage.
The minimum wage is not a livable wage; it is a starter wage. If socialists and liberals want to increase livable wages, they should fight to eliminate the income tax, reduce energy costs and find a balance between protecting the environment and allowing economic development. This will attract companies with good-paying careers jobs.
Raising the minimum wage to $12 is not the answer. When businesses are forced to increase labor costs too fast, they have no choice but to increase prices to cover payroll or lay off workers.
Increasing prices hurts low-income Mainers and those on fixed incomes, especially the elderly. Their income will not increase, but they will pay more for that cup of coffee and everything else they buy.
We will continue to urge Mainers to reject a $12 minimum wage. The job they lose may be their own.
Thank you for listening.