The Politics of Poverty

Ideas and analysis from Oxfam America's policy experts

Some say $10.10 would hurt business, but most business people disagree

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Gap employee Ni’Jean Gibson helps a customer in February 2014 in San Francisco. Gap Inc. announced that it will raise its hourly minimum wage for US employees to $9 in June 2014 and to $10 by June 2015. Photo: Justin Sullivan / Getty Images Gap employee Ni’Jean Gibson helps a customer in February 2014 in San Francisco. Gap Inc. announced that it will raise its hourly minimum wage for US employees to $9 in June 2014 and to $10 by June 2015. Photo: Justin Sullivan / Getty Images

US businesses are in. The American public is in. So what’s next on the minimum wage, Congress?

It has long been the argument from some voices in business—or at least their Washington lobbyists and the Members of Congress who listen to them—that raising the minimum wage would hurt business—and workers—by eliminating jobs.

However, the stark reality is that most business owners in America don’t agree with this idea. In fact, poll after poll shows that most business people think it’s well past time for an increase in the minimum wage.

Indeed, 61 percent of small business owners support a gradual increase in the minimum wage to $10.10 per hour, according to a recent poll by Business for a Fair Minimum Wage.  And a Harris survey released last week found that 62 percent of employers, including 58 percent of senior business leaders, think that the minimum wage should be raised from where it’s been stuck at $7.25 per hour for more than seven years.

These numbers are only slightly lower than the views of the American people. Recent polls have found that between 73 percent and 80 percent of Americans– including majorities among Democrats, Republicans, and Independents– support an increase.

Despite the overwhelming support of most US businesses, as well as the American public, the job-loss canard was again trotted out by the US Chamber of Commerce, the National Restaurant Association, and a handful of other industry associations earlier this year when they wrote to every Senator that increasing the federal minimum wage  “could truly be the difference between continuing to operate and going out of business. For the employees it attempts to help, it may be the difference between a job and unemployment.”

$10.10 is the minimum wage level proposed by President Obama and in legislation by Sen. Tom Harkin (D-IA.) and Rep. George Miller (D-CA). It’s a wage that would boost the incomes of more than 25 million US workers, one-third of whom have families; over 14 million children would see a boost to their family’s income.

As the minimum wage for 200,000 employees of federal contractors rose yesterday to $10.10, thanks to an executive order by the President, one contractor, Carmen Ortiz Larsen of AQUAS Inc. said:

From a business perspective, a higher minimum wage will reduce turnover and training costs, and lead to more productive workers who are focused on the work at hand, not on looking for another job that pays more.

If that’s not enough to dispel—or at least put a dent in—the tried-and-false argument against raising the minimum wage, a raft of academic studies have shown that increasing the minimum wage floor has little or no impact on employment—and may actually create up to 140,000 jobs by pumping money into the economy due to workers’ increased incomes.

In addition, there is evidence that job creation is faster in states that have raised their minimum wages. The Center for Economic and Policy Research found that in 13 of 14 states that raised their minimum wages in 2014, all but one (New Jersey) had higher job growth in the first five months after the wage increase than in the preceding five months. In nine of the states with faster growth, employment gains were above the national median.

So, just as the US Congress is not representing the American people in supporting a decent wage for tens of millions of workers, big Washington lobbyists for low-wage industries don’t reflect the views of most of the nation’s employers.

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