Thursday, February 14, 2013

Businesses Will Raises Prices and Cut Employee Hours Under Obama Minimum Wage Hike

Here's the key quote from the Los Angeles Times piece on the administration's collectivist proposal to hike the minimum wage, "Reaction mixed to Obama's bid to hike minimum wage":
With unemployment at nearly 8%, and more than 12 million workers officially unemployed and millions more who have dropped out of the labor market, economists worry about what a bump in the minimum wage may do.

"I just see it as a nonstarter at this point," said Sophia Koropeckyj, a labor economist at Moody's Analytics. "I'm afraid it could have a bigger [negative] effect when there's more slack in the economy."

Employers in industries that typically pay minimum wage were also mixed in their views.

Selwyn Yosslowitz, co-founder of the California restaurant chain Marmalade Cafe, with 600 workers in 10 locations, said it was a bad time to raise the rate.

He already feels beleaguered by higher costs from Obama's healthcare overhaul, he said. Should a new wage hike take effect, Yosslowitz said, he may have to repeat what he did in 2007 after California's latest minimum wage law took effect. It gradually raised rates to $8 an hour a year later.

"You increase your menu prices and you reduce hours," he said. "People who come in normally at 9 o'clock in the morning, you try to get them to clock in at 9:30 and save half an hour. We also stopped hiring people. You can't stay in business if you don't."
Some business owners said a wage hike wasn't going to be a big deal, although economic research shows that raising the minimum wage displaces workers most likely targeted by such policies: the poorest workers with the least competitive job skills. See Erika Johnson, "Schultz: No way will raising the minimum wage hurt small businesses."