Delaware NFIB: Economy Too Weak for Labor Cost Hike

Date: January 28, 2014

Dover
(January 28, 2014)

The National Federation of Independent
Business (NFIB)
, which represents hundreds of small business owners in Delaware,
today thanked lawmakers for backing off of a proposal to put labor costs on
auto pilot but warned that the economy remains too weak to impose a 13 percent
increase in the minimum wage.

“The
new version of the bill is a big improvement over its predecessor but it still
raises the cost of doing business arbitrarily without any evidence that
consumers are willing to reach deeper into their pockets,” said NFIB State Director Jessica Cooper

The
House Economic Development Committee today is expected to consider a bill to
raise the minimum wage by a full dollar by 2015.  It strips out language from the original
version that would have mandated automatic future increases every year based on
inflation.  That, according to Cooper,
was the most dangerous element of the plan.

“The
best economists in the world cannot accurately predict inflation and small
businesses need predictability,” she said. 
“We appreciate that the Committee listened to small business owners who
were concerned by that component of the legislation.”

The
new bill would raise the minimum wage this year from $7.25 per hour to $7.75
and then to $8.25 in 2015. 

“It’s
a 13 percent increase in less than 12 months,” said Cooper.  “Some small businesses will find that
difficult to absorb and it certainly puts us at a disadvantage against
Virginia, Pennsylvania and many other states.”

The
problem with raising the minimum wage is that it inflates wages all the way up
the scale.

“The
advocates like to pretend that only entry-level workers are affected, but
that’s not how the economy works,” said Cooper. 
“Workers who are already making $8.25 per hour will expect and deserve
to be paid more than the new kid who walks through the door.  Small businesses will be forced to raise
wages for all of their hourly workers for find ways to do more with fewer
employees.

“This
is a better version of a bad idea and it should be rejected,” she
continued.  “The committee members are
under a lot of pressure from labor unions and activists, and we can appreciate
their position.  But the best thing to do
for Delaware’s economy is to let the market work.”

NFIB
is the country’s leading advocate for small business owners with more than
300,000 members nationwide.  It has
offices in Washington, DC and all the state capitals.  For more information about NFIB, please log
on to www.nfib.com.

 

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