The minimum wage should not be set at the level of the living wage, $10.50 an hour in Lewisburg. Lindo Jones, Sean Fortney, and Benjamin Schrock

Definitions The minimum wage should be set at the level of the living wage, $10.50 an hour in Lewisburg. -Minimum Wage- The lowest payable to employees in general or to designated employees as fixed by law or by union agreement.Set- to fix the value of a certain amount or rate.Level- an extent, measure, or degree of intensity.Living Wage- an above market wage high enough for the worker and family to remain healthy and comfortable.

How is Living Wage Calculated -Federal poverty level -Single person is $9,300-Fair market rent for the Area-472.00 for one bedroom apartment-Family budget and self-sufficent standards-1 parent 1 child income $25,537

Devastating Economic Effects -Dramatic Inflation-Destroy small Businesses-Employment devastation

Dramatic Inflation Inflation- A persistent increase in the level of consumer prices or a persistent decline in the purchasing power of moneyCost-push inflation- A phenomenon in which the general price levels rise due to increases in the cost of wages and raw materials.

“I can only raise the prices so much”: over $300,000 in cost

Inflation Vs. Minimum wage inCreases in in Ontario

Why does it matter? Consumer spends more money: is it really an increase at all?If the increase changes at such a significant rate: ($4.00 in a day), disastrous outcome (hyper inflation)- little or no buying power in world market

Small Business Eradication When labor cost rises: business has three choicesAdjust employment rate Raise pricesAbsorb the costBig business has better chance absorbing the cost: small business does not.For example: small increase of $1.60 per hour would cost a bake shop with ten clerks and bakers over $30,000 per year

What does the U.S. Chamber of Commerce say?Small business harmed. 30% of the 170 respondents said they may have to raise their prices in order to cover the increase in the minimum wage. Over 20% said they will not be growing their staff as planned prior to the minimum wage increase. Nearly 50% of these companies said they have experienced other, nonwage-related cost increases as a result of the revised minimum wage.

30% of the 170 respondents said they may have to raise their prices in order to cover the increase in the minimum wage.

Over 20% said they will not be growing their staff as planned prior to the minimum wage increase.

Nearly 50% of these companies said they have experienced other, nonwage-related cost increases as a result of the revised minimum wage.

What do small business say?Small business harmed. Kevin Westley head of the Golden Gate Restaurant Association survey of 1,100 restaurants:Ninety-eight percent of the restaurants raised prices,eighty-nine percent raised prices significantly. Fifty-four percent of restaurants reduced the number of employees ninety-one percent reported lower profits.

Kevin Westley head of the Golden Gate Restaurant Association survey of 1,100 restaurants:

Ninety-eight percent of the restaurants raised prices,

eighty-nine percent raised prices significantly.

Fifty-four percent of restaurants reduced the number of employees

ninety-one percent reported lower profits.

Example:Small business harmed. -Joe, classic American entrepreneur, worked 80 hours per week for 25 years to purchase a McDonalds FranchiseJoe has 20 employees who work the 16 hours the restaurant is open 7 days per weekA $1.82 increase will result in an additional $4,300 payroll per month. After working hard for 25 year to realize his dream, should Joe cut his profit from $7,500 to $3,200 per month?

Joe has 20 employees who work the 16 hours the restaurant is open 7 days per week

A $1.82 increase will result in an additional $4,300 payroll per month.

After working hard for 25 year to realize his dream, should Joe cut his profit from $7,500 to $3,200 per month?

Why Does it matter?Small Businesses:• Represent 99.7 percent of all employer firms.• Employ about half of all private sector employees• Pay nearly 45 percent of total U.S. private payroll.• Have generated 60 to 80 percent of net new jobs annuallyover the last decade.

Devastating Unemployment Negative effects that is would have on employment in our economy. Some of these cities that have tried a. Santa Fe, New Mexico b. Chicago, Illinois

Santa Fe, New Mexico June 24, 2004 the Living Wage Amendment became law in Santa Fe, NM1 . Santa Fe’s ordinance raised the wage floor from $5.15 per hour to $8.50, 2. This is a 65% increase at one time.

Santa Fe, New Mexico Scheduled pay increases: a. $9.50 on January 1, 2006 b. $10.50 on January 1, 2008 c. And will be indexed to inflation starting on January 1, 2009

What effects did this have on the cities? Santa Fe, New Mexico4 . The minimum wage increase caused the loss of approximately 540 jobs. This was a 16% increase in the unemployment rate.5. As of January 1, 2009 the minimum wage was set to $9.85

Who Does This Effect? Santa Fe, New Mexico: 1. Those with 12 years of education or less suffered an extremely large and negative effect 2. Individuals that where able to keep their jobs found their hours reduced 3.5 hours on average per week.

What effects did this have on the cities? Chicago, Illinois1 . This was presented to the Chicago City Council in July 1996 calling for a 79% minimum wage hike2. The city estimated at least a 1,300 job loss as a result of the ordinance

Continued effects this had on the cities Chicago, IllinoisThis ordinance would cost the city nearly $20 million per year! a. $4.2 million would go to the administrative costs of certification, monitoring, and enforcement of the ordinance. b. This $20 million would require a permanent tax increase on all citizens of Chicago.

What do minimum wage hikes do on a larger scale? In 1998 California increased minimum wage by 60 centsThe results were 1. 25,000 job loss 2. $230 million lost in annual CA worker income 3. $790 million in annual CA labor costs increase

What do Congressional reports say?Minimum wage increases cause unemployment

Why Does This Matter? The unemployment can be easily tipped, creating a Ripple effect!High employment costs can lead to large companies to start Outsourcing.The Congressional Budget Office (CBO) estimated that a $1.34 increase in the minimum wage would cost approximately 250,000 to 500,000 jobs to be lost

Questions?

Conclusion “The Great Depression, like most other periods of severe unemployment, was produced by government mismanagement rather than by any inherent instability of the private economy.” – Milton Friedman-Dramatic Inflation-Destroy small Businesses-Employment devastation