Small Business Urges Legislators to Reject Minimum Wage Bill
House Labor Committee Passes Harmful HB 237

JACKSON, Jan. 4, 2007 ? The National Federation of Independent Business, Mississippi’s leading small-business advocacy group, today criticized passage of HB 237 by the Mississippi House Labor Committee and urged legislators to defeat the harmful bill. If passed, the bill would establish a minimum wage in Mississippi, set a rate of $6.25 per hour by July 1, increase it to $7.25 per hour on Jan. 15, 2008, and then index future increases to the U.S. inflation rate.

“Evidence overwhelmingly shows the market forces that are working in Mississippi should not be abandoned for damaging public policy,” NFIB/Mississippi State Director Ron Aldridge said. “Small-business owners understand minimum wage increases cause job losses at the entry level and artificially increase the wage scale, putting further pressure on the labor market and causing prices to rise for all consumers. NFIB will encourage our elected officials to pause and look long and hard at concrete evidence that supports these facts.”

Specifically, Aldridge said 2005 data from the U. S. Department of Labor Bureau of Labor Statistics indicates only about 23,000 of the 664,000 Mississippi workers paid at hourly rates are earning the federal minimum. Of those, only about 8,000 earned exactly the federal minimum wage of $5.15, while another 15,000 were paid below the minimum. Combined, only 3.5 percent of all hourly-paid Mississippi workers are earning at or below the federal minimum. Aldridge noted most minimum wage workers are young, part-time entry-level workers below 25 years of age, according to federal statistics.

Also of note:

? Research from the Federal Reserve Bank of Chicago estimates a job loss of 2 percent to 3 percent for each 10 percent increase in the minimum wage. An increase in the minimum wage by $1.10 (from $5.15 to $6.25 as proposed in HB 237) represents an increase of greater than 21 percent. Job losses in affected industries, like the restaurant industry in Mississippi, could exceed 6 percent and hiring would subside.

? Seventy-one percent of economists at Alabama state universities agreed that raising the minimum wage would result in a decrease in entry-level jobs in Alabama.

? According to research at Cornell University and the University of Connecticut, a 10 percent increase in the minimum wage results in an 8.5 percent increase in unemployment among adults without a high school diploma. Further research from Duke and Michigan State universities and the University of Wisconsin shows lower-skilled adults suffer considerable job loss following minimum wage hikes.

? Municipalities that have adopted living wage increases have experienced an average rise in unemployment of 1.7 percentage points, according to 2005 figures from the National Bureau of Economic Research. In some cities, the job loss increase was as high as 3.5 percentage points two to three years after implementation.