Study: $15-An-Hour Minimum Wage Would Kill 281,000 Michigan Jobs

A recent study by a conservative think tank found that raising the state minimum wage to $15 an hour would cost Michigan the equivalent of 281,000 full-time jobs in 2021.

The wage raise would directly affect 37.4 percent of wage and salary workers in Michigan, said the study, which was conducted by the Washington, D.C.-based Heritage Foundation.

The study, titled “How $15-per-Hour Minimum Starting Wages Would Affect Each State,” also looked at the effect of raising the federal minimum wage, which covers fewer jobs than the state law. Raising the federal wage to $15 an hour would lead to an estimated loss of 223,000 full-time jobs in 2021. The federal wage raise would directly affect 36.6 percent of wage and salary workers in the state.

An estimated 9 million jobs would be lost nationally due to state minimum-wage hikes, the study found.

The study also showed that full-time-equivalent employment would be lost in every state, whether the mandate increases came from state or federal governments.

Several cities including Washington, D.C., Los Angeles, and Seattle have already raised their minimum wage to $15. California and New York recently passed bills that will raise wages in the years to come.

An increase in the minimum wage “would result in many states losing hundreds of thousands of jobs and would considerably curtail employment opportunities, especially for less-skilled workers,” wrote James Sherk, the study’s author.

“Efforts to create jobs and reduce poverty should not center on forcing employers to pay higher starting wages,” the study concluded.

The study used data from the National Bureau of Economic Research.

There have been recent efforts to increase the minimum wage in Michigan. In 2015, Sen. Bert Johnson, D-Highland Park, introduced Senate Bill 391, which would gradually raise the state's minimum wage to $15 by 2018.

The bill died in a House committee and Johnson did not respond to a request for comment.

Michael LaFaive, the fiscal policy director at the Mackinac Center for Public Policy, said with an artificially higher price of employment, fewer people will be employed.

“The only real minimum wage is zero, which is what many low-wage people will start making if a $15 per-hour minimum is adopted,” he said. “The reason is simple. There is an inverse relationship between the price of just about everything and the quantity demanded of it. If governments raise the price of employment, fewer people will find themselves employed.”

“Low-wage jobs are often the first rung on the economic ladder of success, not a person’s last stop,” LaFaive added. “Take that first rung away and it is hard for people to get the job experience that they need to earn higher wages on their own account.”

A 2014 analysis by the nonpartisan Congressional Budget Office said that raising the minimum wage to $10.10 by 2016 “would reduce total employment by about 500,000 workers.”

“Fight for $15,” a national organization that engages campaigns for higher wages and union rights, did not reply to a request for comment.

The Michigan Restaurant Association, an organization that lobbies for the restaurant industry and in the past has opposed minimum wage raises, agreed with the study's findings.

“The study gives credence to the off-used term 'too much, too fast,'” said Justin Winslow, president of the Michigan Restaurant Association. “The restaurateurs across the country have been saying about a $15 minimum wage that it's a shock to the system that restaurant owners working on tight margins simply can't adapt to. They don't have the flexibility to adapt to that much of a shock to the system, and therefore [an increases] puts people out of work and sometimes puts businesses out of business.”

Winslow continued: “And frankly it [$15 minimum wage raise] goes out of its way to disproportionately hurt those people seeking it and getting their first opportunity, their first job.” The increase, he continued “puts them out of the workforce as a direct result, which goes counter to I think what the other side's aim and intentions are.”