Labor Law Guy

Are New Minimum Wages Fueling Layoffs?

Posted in Federal Labor Law, State Labor Law by laborlawguy on January 19, 2009

Many have argued that minimum wage laws price certain people out of the job market skill-wise and also lead to layoffs as small businesses cope with their finances and the added burden of higher wages.

In this light, it’s notable that fully 40 percent of the 693,000 who lost their jobs in the latest ADP report (November-December 2008) were from small businesses.

Arthur Bruzzone, a former California state commissioner, frequent columnist and native of the city, writes that San Francisco is really courting disaster with its minimum wage of $9.79 (one of two cities with minimum wages above $9). Team that new rate with mandates to provide health care, paid sick days and transportation assistance, and you can see that City by the Bay small businesses are headhunting–counting heads to chop off the payroll, that is.

In “City Hall’s ‘progressive’ small business mandates will now exact pain,” Bruzzone writes:

City Hall is responsible for bleeding San Francisco’s small businesses.  Now the City Hall’s progressive initiatives will bring real pain to thousands of San Franciscans. Of course, those who keep their jobs will have sick leave, health care, higher hourly wages.  But what of those who have no job?

Another in a series on the unintended (but foreseeable) consequences of good intentions.

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One Response

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  1. Anonymous said, on January 22, 2009 at 7:44 am

    I find this kind of funny. I live in California (illegal immigration capital). I’m a small business owner and I’m sorry I already pay through the nose in taxes so I try and report as little as possible to the government. To avoid a lot of cost I pay my employees under the table to avoid all the taxes and cost associated with reporting them. Of course minimum wage then isn’t so bad for them because they are taking home exactly what they made without the BS. I do however put some employee’s on the books but I don’t show their real wages and they know that because I’m paying them extra on the side. They really don’t care and I’m still in business. I also tell them if they get hurt their is no insurance or if I lay them off there is no unemployment but they seem to not care. Its funny because I’m required to post all these labor law posters and osha compliance posters but everyone laughs at them including the employee’s. I buy them from a company called Personnel Concepts and pay them $140 for everything and it saves me thousands each year.

    I really don’t believe the jobless claims. Including in california where just about every small business owner will hire an illegal alien at a drop of hat just to save some money. I understand why they would to. The state of california is screwed up.


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