Minimum Wage Boosts Affecting Labor Markets Across US

Date: September 15, 2015

Some Businesses Already Feeling Effects Of Higher Wages

As the push to boost minimum wages at local, state, and federal levels continues, some cities across the US are serving as cautionary tales for others looking to enact similar moves. CNN Money recently profiled the city of Emeryville, California, where wages jumped after a July 2 ordinance boosted the minimum wage from $9 per hour to $14.44, making it the city with the highest minimum wage in the US. Businesses with 55 or fewer employees only had to raise wages to $12.25, and must then implement further $1 increases each year until 2019. Though Emeryville Mayor Ruth Atkin argued that a “minimum wage” should be “a living wage,” small businesses there are “feeling the pinch.” A local coffee shop, Farley’s, has 45 employees that now must earn the $12.25 per hour wage. Owner Chris Hillyard argued, “We can only raise prices a certain percentage before we start to lose customers and then it’s a negative overall impact. I know that any small independent business that was considering opening in Emeryville is probably going to have to consider if they are going to go forward with that.”

In another example of the wages minimum wage hikes may potentially negatively effect small businesses across the US, the St. Louis Post-Dispatch reported on an ordinance passed in the City of St. Louis in August to increase the minimum wage in the city to $9 per hour as of January 1, 2016, with hourly increases through 2018. This would make city jobs higher-paying than those in the County of St. Louis, where the minimum wage would remain at the state level of $7.65 per hour. Jeremy Reynolds, a local St. Louis Community College student earning a minimum wage, suggested he would leave a job in the county for one in the city due to the wage increase, thus highlighting the potential problem some small businesses will face in finding workers to fill jobs due to more competitive wages that would be available down the street.

What This Means For Small Businesses

The cities of Emeryville, California and St. Louis, Missouri are of different sizes, geographic locations, and at different points in the minimum wage debate. However, both are worrisome examples of the negative effects of wage hikes on small businesses. Small business owners are likely to face increased pressure to boost wages as patchwork wage regulations generate uneven earnings across states. This uncertain wage environment could make it harder to prepare for future growth, deterring small business owners from hiring.

Additional Reading

NFIB has previously noted the effects of wage increases in San Francisco and Seattle.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

Related Content: Small Business News | Minimum Wage

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