LIMA — Area business leaders fear job losses and that inflation would rear its ugly head if the federal minimum wage goes to $15 by 2025 even though local economics professors don’t believe it will cause significant harm to the economy.
The proposed increase to $15 that Congress is considering would be done in increments, not all at once.
“You know, 2.1% of the population earns the minimum wage. So this might take it up to 4%,” said David McClough, an economics professor at Ohio Northern University. “You have to consider that the wage goes up for quite a few people, but there will be a lot of jobs that are eliminated, and firms just will be much slower to hire people. So that’ll dampen any kind of inflationary effect, due to the fact that the firms are going to incur the cost long before they realize any of the revenue. So it’ll probably offset or slow any potential inflation, but I wouldn’t expect any to begin with. There’s no inflation in our economy.”
A new report by the Economic Policy Institute contends that the $15 minimum wage would save $13.4 billion to $30 billion in taxpayer revenue annually. It would also increase Federal Insurance Contributions Act revenue by between $7 billion and $13.9 billion.
Still, most of the local business owners The Lima News spoke with held onto the conventional wisdom about the minimum wage from years ago.
“To me, anytime you increase wages without a corresponding increase in productivity, you’re just basically creating inflation. So that’s my take on it,” said Carl Berger, president of Superior Wholesale Distributors. “If we’re paying $18 and the minimum wage is $15, many of your workers will expect more. Certainly, the people who are paying that wage are going to have to increase their prices and that makes everybody else’s money worth less.”
McClough doesn’t believe business owners will increase the salaries of everybody they employ, just because their lowest-paid workers received a raise.
“I can’t imagine that firms will uniformly respond to that with proportionately higher wages — it’s just too expensive and unprofitable and threatening to their business,” McClough said.
Tracie Sanchez, owner of the Lima Pallet Company, feels she won’t have any choice but to raise salaries.
“We do have to pay or we’re gonna lose good people,” Sanchez said. “There’s not one business owner, that’s going to say I’m paying my top people $15, $18 $20 an hour, and now I’m paying my minimum wage at $15. You think those people are gonna work at $15 or $18 and $20 an hour? No, they’re gonna expect raises, they’re gonna look at us like, what the heck, if minimum wage is $15, they’re gonna expect more and we’ll have to pay them.”
Sanchez admits she does pay some of her employees minimum wage.
“If this minimum wage goes up to $15 an hour, I will not be hiring summer help college students, or high school students, which is a shame — or the…
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