Another Way to Add to RI’s Unemployment Problem…
… would be for the House to join the Senate in passing legislation automatically adjusting the minimum wage every year. A bill proposed by Sen. Leonidas P. Raptakis (D- Coventry, East Greenwich, Warwick, West Warwick) slithered easily through the Senate in May. A similar bill (PDF in the House is currently being held for study.
As Employment Policies Institute Senior Economic Analysis Kristen Lopez Eastlick explains, the move would hurt low-wage earners:
Decades of economic research demonstrate that there is an increase in job losses following minimum-wage hikes, particularly among vulnerable groups such as minority teens and adults without a high-school diploma. Legislation that would make minimum-wage increases automatic merely shifts these negative effects from a once-in-a-while occurrence to an annual event.
While a 25-cent increase may not seem like a lot, a business owner with 20 entry-level employees would have to absorb over $10,000 in new labor costs each year. Small businesses faced with decreasing demand would be forced to cut employee hours and eliminate some jobs entirely in order to stomach an automatic-wage hike that would take place regardless of the economic climate.
It would also hurt new-job creation by adding a cost structure for potential employers to consider before hiring new employees. Moreover businesses that don’t already operate in Rhode Island would have to take the requirement under advisement, as well.