Economists: Minimum wage increase shouldn’t hurt economy

By Sam Shriver -





LIMA — There’s a move afoot in Congress to raise the minimum wage to $15 an hour by 2025. The current federal minimum wage is only $7.25 an hour. In Ohio, the minimum wage is $8.80 an hour.

Organizations like the Lima Area Chamber of Commerce are concerned about the ramifications of the legislation on small businesses.

Jed Metzger, president/CEO of the Lima Area Chamber of Commerce, worries that the higher minimum wage will affect how many workers companies can afford.

“… They’re going to make choices,” Metzger said. “Maybe they have one less staff. I mean, that’s what has happened in the past. Going forward, that’s what will happen.”

Ohio Northern University Economics Professor David McClough contends most businesses won’t notice the impact of a $15 minimum wage.

“I don’t think it matters much,” McClough said. “A very small proportion of people typically are in the minimum wage range. Initially, it’ll be substantial in the sense that you’re basically doubling it and so a lot of people that were making slightly more will be moved up to that level.”

The spending power of the workers who earn the new minimum wage should help the economy.

“That’s a potential positive of the policy. There are two things to be aware of. Number one, the marketplace was already starting to respond to pressure in the labor market. You probably can find headlines on the internet, where that announced that Target and other retailers are introducing entry-level wages of $15 an hour. So the marketplace was already starting to feel the squeeze and starting to raise wages naturally. So this policy is kind of just falling in line with what was going to happen anyway,” McClough said.

Bluffton University Economics Professor Jonathan Andreas said the research shows the economy can handle a minimum wage increase.

“It used to be that economists tend to think that minimum wage caused unemployment. But there’s been a ton of research on that in the past couple of decades and at this point, the majority of economists actually think that minimum wage legislation would help low-wage workers on net, and I agree with that. Now, how high the minimum wage can go before it starts having some sort of bad effects, that’s not totally clear yet,” Andreas said.

Andreas points out potential problems at colleges and universities if the minimum wage goes up.

“We have a huge number of minimum wage workers (at Bluffton University) and the last time it was raised, it hurt us pretty bad because it was not announced enough in advance so we could plan our budget. So how it’s done matters a lot,” Andreas said.

Andreas could see fast-food restaurants change if the minimum wage rises to $15 an hour.

“They’re going to buy automated kiosks so they don’t have to hire as many workers and save money that way,” Andreas said.

Carefully raising the minimum wage is the best way to handle it.

“We can sort of do it $1 this year, $1 next year and we’ll just see what happens in the labor market so that we don’t have to worry. That’s super cautious to me. Because we can see how high it can go without causing problems then,” Andreas said.


By Sam Shriver

Reach Sam Shriver at 567-242-0409.

Reach Sam Shriver at 567-242-0409.

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