Should Florida Fight For $15?

An analysis of businesses' anticipated responses to proposed increases in the minimum wage

Abstract

Across the nation, lawmakers continue to grapple with the viability and impact of increasing the minimum wage to $15 an hour. Last year, the Florida state legislature took up the measure in Senate Bill 6 and House Bill 109, that would begin raising the $8.10 rate, beginning in January 2017. A ballot measure for 2018 or 2020 has also been discussed.

What is the potential impact of raising the minimum wage to $15 in Florida? To better understand how this change would impact companies who have hourly staff, a state-wide telephone survey was conducted with 306 business owners and managers in July and August 2017.

The results of this survey reveal that many of these businesses would be adversely impacted by such
an increase:

  • Alarmingly, nearly one-third (30%) say they may be forced to go out of business, with 18% very likely to close. They do not think they could absorb the increase or pass it along to their customers.
  • Many business owners and managers anticipate that increases will also hurt workers. Half or more will see operations scaled back and expect to cut employee hours (56%). About as many say they will have staff layoffs (50%). About one-third will likely look for technological alternatives to replace workers (33%) or hire more experienced workers (33%).
  • Consumers will feel the pinch too. Most businesses will likely increase prices (59%), especially those with tipped employees (75%), ones who operate in the hospitality industry (73%) or ones that are part of a franchise (64%).
  • The argument that it will be easier on businesses if the increases are phased in over time does not seem to hold up. Nearly half (49%) say they will be forced to make changes (price increases, layoffs, etc.) once the rates reach $11. When the rate reaches $15, two-thirds (68%) expect that they will be forced to respond.

In summary, while an increase in the minimum wage may appear to benefit workers, it will not be easily absorbed by businesses. This, coupled with the expected response from businesses who employ hourly and part-time staff, suggests that Florida should brace for a significant, negative economic impact if minimum wage laws are enacted.