9.9 Million Workers Impacted

(5MinNewsBreak.com) – 2024 hasn’t even started yet and heated discussions about the future of the nation are reaching unprecedented heights, and to add more fuel to the fire, an upcoming change of the minimum wage across half the states was announced and people are already fearing what could this mean for the economy ahead of the most anticipated elections in the last century.

In 25 states, minimum wages are set to rise, with significant hikes in California, New York, and Washington, reaching at least $16 an hour. While proponents like Holly Sklar of Business for a Fair Minimum Wage argue these raises are vital given the stagnant federal minimum wage and high inflation, there are concerns about their potential side effects.

Brian Marks from the University of New Haven points out that businesses might respond by reducing hiring and increasing automation, a trend already evident in industries like grocery. Despite these concerns, Marks does not foresee a spike in unemployment due to the current tight labor market, and notes that many businesses have preemptively adjusted prices.

The national unemployment rate, sitting below the Federal Reserve’s target, and persistent inflation, though lower than its peak, add layers to this complex issue. States like Louisiana, Texas, and Wisconsin still adhere to the federal minimum of $7.25, unchanged since 2009. A proposal by Sen. Bernard Sanders to raise the federal minimum to $17 an hour is estimated by the Congressional Budget Office to potentially cost 700,000 jobs.

Economist Walter Block emphasizes the challenges higher minimum wages pose for unskilled workers, potentially rendering them unemployable if their productivity doesn’t match the mandated wage. The upcoming changes will see Washington having the highest state minimum, followed by New York, while California, a state with significant economic clout, will also see a considerable rise.

Business consultant Michael Warder cautions that automation might replace workers priced out of jobs, and businesses could relocate out of high-wage states. Sean Higgins from the Competitive Enterprise Institute highlights the adverse effect on small businesses, particularly those employing young, local workers.

In Maryland, New Jersey, and Connecticut, minimum wages are set to rise, with similar plans in Oregon, the District of Columbia, Nevada, and Florida. Despite these increases, many workers won’t see changes in their paychecks, as the average hourly earnings in leisure and hospitality already exceed the new minimums. This leads to Andrew Crapuchettes, CEO of RedBalloon, labeling the minimum wage laws as largely symbolic and politically motivated, suggesting that market forces will be a more significant determinant of wages.