Increasing the Minimum Wage: Rebuttal to NFIB/WRB Anti-Minimum Wage Arguments

Fact Sheet | February 1, 2001

Executive Summary

The Economic Opportunity Institute prepared this rebuttal in October 1998 in response to the position papers opposing Initiative 688 authored by the National Federation of Independent Business/Washington (NFIB) and the Washington Restaurant Association (WRA). [This rebuttal was prepared in October 1998 and updated in January 2001.]

Issue #1: Members of the NFIB oppose increasing the minimum wage.

  • NFIB’s own survey figures indicates that over one-third of their members support increasing the minimum wage. These small business owners understand that paying a living wage makes good business sense and builds the communities, the economies, and families’ purchasing power where small businesses are located. As stated by restaurant owner Taimi Dunn Gorman, owner of the Clopohon Café in Bellingham, “@offering a decent living wage to workers@goes a long way toward creating a positive work environment.” (Whatcom County Business Journal)
  • NFIB data also show that a majority (57%) of small businesses don’t think that a minimum wage increase “will have an impact on their business in either increased prices, reductions in hours or job opportunities for part-time workers or increasing the hourly rate for non-minimum wage employees.”

 Issue #2: The minimum wage increase reduces employment and results in reductions in hours or job opportunities for part-time workers.

  • This is a blatant misrepresentation of the results of the Minimum Wage Study Commission (MWSC), a congressionally sponsored committee of economists that looked at the economic impact of the minimum wage at the end of the 1970s. The MWSC was clear that the 1-3% disemployment figure applied only to teenagers (less than 30% of minimum wage workers) and that the best estimate was closer to the low end of the estimate for job loss. The MWSC concluded that the employment impact on young adults (ages 20-24) was smaller than that for teenagers. Finally, the MWSC found no evidence that the minimum wage had any effect on adult employment. There is no solid data to back up the assertion that “(i)t is likely that employers laid off younger workers and replac(ed) them with more skilled workers” in response to the Washington state minimum wage increases in 1989 and 1990. Layoffs which employers attributed to the minimum wage increase represented less than one-half of a percent of total employment in affected firms. Further, one half of all employers reporting layoffs actually increased employment in the same year. Twice as many affected employees reported increases in work hours as those who reported decreases in the 1988–1990 time frame.
  •  The substitution argument is even more suspect today. Where would these higher-skilled workers come from? Are they currently unemployed? This is highly unlikely, given the low unemployment rate. If small businesses are going to hire skilled workers away from other businesses, then this creates opportunities for the less skilled to slot into the new vacancies. It also gives employers incentives to train workers to fill these slots.

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