Other business groups I have talked to predict the negative effect of the higher minimum wage on jobs will be significant.
"Every dollar the minimum wage mandates comes out of somebody else's pocket. There's no gain in spending power as alleged by the administration," said Bill Dunkelberg, chief economist for the National Federation of Independent Business, the nation's chief small-business lobby.
"If you run a pizza parlor of seven employees, your labor bill goes up by about $14,000. That has to come out of your pocket, or you pass it along to your customers," Dunkelberg told me.
"The secretary of labor (Hilda L. Solis) said this will mean a $5.5 billion total increase in pay that minimum-wage workers will get over the next 12 months. I just wonder where small businesses are going to get $5.5 billion when so many are on the verge of going out of business. This is the worst time you could have a 10.7 percent wage increase," he said.
When the National Small Business Association surveyed its members earlier this month, three-quarters said the economy had worsened. They also said that sales were down sharply along with profits and that they have had to lay off workers.
Official data is slim to nonexistent at this point about how much of a role the minimum-wage hike will play in future job losses, though some studies are under way. David Neumark, professor of economics at the University of California-Irvine, estimates the July 24 minimum-wage hike alone will cost about 300,000 jobs for workers under the age of 25.
"Usually businesses can pay the higher minimum wage when times are good, usually by selling more, so as costs go up, so does the value of the work," Dunkelberg said. "But now people are spending less, gas prices rise among other costs, so when you raise the minimum on top of that, it makes the wage even more unprofitable."
Common sense would dictate that the higher minimum be rolled back to help small businesses improve their bottom line and to open up more entry-level jobs for younger workers. But Congress intends to keep the higher minimum wage, no matter how many jobs are eliminated, while it searches for ways to raise ever-higher taxes on small business to pay for its gold-plated healthcare takeover plan.
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