NEW YORK, December 30, 2013 — Thirteen states across the country have approved increases to their minimum wage. The highest new wage is in the city of SeaTac in Washington State, which implements their new wage of $15 per hour on January 1, 2014. Their current minimum wage is $9.32.
Of the 13 states, only Oregon, Washington, and California will be above the $9.00 per hour threshold that President Obama advocated for. While increases do go into effect tomorrow in most states, consensus for raising state minimum wages remains elusive and contentious.
In New Jersey, for example, the increase was voted on by the people via a ballot initiative in last month’s election. However, industry and policy experts have differing opinions on how it will affect the state overall. Some contend that forcing employers to shell out more money on labor costs without any earning additional revenue from their businesses will cause business owners to cut back on employee hours, slow hiring, and in some cases cause employers to let people go, ultimately having a negative impact on the economy.
Others suggest that more employees earning more money will spend more money, having a positive impact on local economies that will lead to more jobs. Special interest groups advocating for the wage hike were busy prior to the election claiming that poverty in New Jersey — one of the nation’s wealthiest states — was on the rise. Business groups and trade associations pointed out that a 14 per cent increase in expenses without a 14 per cent increase in revenue or profits would have to come from somewhere, again referring to cuts in employees’ hours and reduced future job growth.
Mr. Jose Arango, Director of Economic Development for the City of Jersey City, says of the minimum wage increase, “We have to respect the will of voters, and we have to be careful not to jeopardize opportunities for new jobs.”
Arango continues, “Oil prices are down and we still don’t see any meaningful improvement in our national economy. Combine that with Obamacare which was supposed to help 80 million uninsured Americans and now has 300 million Americans in crisis because it’s been such a disaster. This causes a loss of confidence in government; increasing the minimum wage has potential to be just as damaging if we think with our hearts instead of thinking realistically with our hearts and our minds. Because, If we’re not careful, we can end up with reincarnation of Hugo Chavez like they did for Mayor in New York City.”
Pastry chef Maria Nitti, owner of “Isabella’s Creation,” a boutique bakery in Brooklyn New York, says, “As a small business owner it’s extremely difficult to hear about this; I’m not hiring any new people. I currently have part-time help and interns when needed throughout the year, but this increase in state’s minimum wage definitely wasn’t made with small business owners in mind.”
She adds, “I’m here trying to live my dream and I’m being forced to comply with increases labor costs and health insurance costs if I hire fulltime, without increased income for my business worries me and it makes me think ‘will I eventually have to shut my doors because of this?’”
Whether increases to states’ minimum wages will help or hurt the economy remains to be seen. Until then, Americans in 13 states will participate in a large-scale economics experiment.
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