Survey Reveals Impact of Raising Minimum Wage to $10.10
Express Employment Professionals, the nation’s largest privately held staffing firm, today released the results of a survey asking employers about the impact a minimum wage hike will have on their businesses.
If the minimum wage were raised to $10.10 an hour, as President Obama has proposed, 38 percent of employers who currently pay employees minimum wage say that they would have to let some employees go to cover the cost. Among the same group, 54 percent say they would reduce hiring, and 65 percent say they would raise prices on their goods and services. (See Figure 1.)
Among all employers surveyed, including those who do not currently pay the minimum wage, 19 percent say they would let employees go; 39 percent would reduce hiring; and 51 percent would raise prices. When the minimum wage is increased, it puts pressure on all companies to increase pay for their entry level employees, even for companies that presently pay above the current minimum wage of $7.25/hour. In effect, entry level pay will rise to $10.10 an hour and workers at or slightly above that level will also seek pay raises since they previously made more than the minimum wage. Therefore, costs can increase even for companies that don’t currently pay the minimum wage. (See Figure 2.)
“There’s been a lot of debate and speculation about the impact of a minimum wage increase on job creation,” said Bob Funk, CEO of Express, and a former chairman of the Federal Reserve Bank of Kansas City. “At Express, we decided to go directly to the employers who make those decisions to find out what a minimum wage increase to $10.10 would mean for them specifically and for the economy in general.
“As with any such policy change, there are upsides and downsides. But based on this survey, there’s no denying that raising the minimum wage will result in layoffs, reduced hiring, and higher prices at a large chunk of American companies. How severe will those effects be? That remains to be seen, but policymakers will certainly want to be mindful of this reality as they legislate.”
Responses came from a February 2014 survey of 1,213 business owners and HR professionals nationwide, 230 of which reported paying their employees the current minimum wage. The survey is part of Express Employment Professionals America Employed campaign, a series of releases that explore the state of employment and focuses on who gets hired and why.
Robert A. “Bob” Funk is chairman and chief executive officer of Express Employment Professionals. Headquartered in Oklahoma City, the international staffing company has 675 franchises in the U.S., Canada and South Africa. Under his leadership, Express has put more than five million people to work worldwide. Funk served as the Chairman of the Federal Reserve Bank of Kansas City and was also the Chairman of the Conference of Chairmen of the Federal Reserve.
Express Employment Professionals puts people to work. It generated more than $2.5 billion in temporary sales and employed nearly 400,000 people in 2013, and ranks as the largest privately held staffing company in the United States. Its long-term goal is to put a million people to work annually.