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Business groups slam House for passing $15 minimum wage bill

Key Points
  • The House of Representatives' decision to pass a bill raising the federal minimum wage to $15 received almost immediate criticism from major business organizations.
  • The groups say the bill, which the Democrat-controlled chamber passed in a 231-199 vote, would be expensive and lead to increased unemployment.
  • The Congressional Budget Office estimated raising the minimum wage to $15 could cost 1.3 million jobs but raise pay for 17 million
Andres Orellana cooks vegetables at Illegal Pete's on the Pearl Street Mall in Boulder last December. Illegal Pete's has announced that they will raise minimum wage to $15 per hour nationally.
Jeremy Papasso | Digital First Media | Boulder Daily Camera | Getty Images

The House of Representatives' decision to pass a bill raising the federal minimum wage to $15 an hour received almost immediate criticism from major business organizations.

The groups say the bill, which the Democrat-controlled chamber passed in a 231-199 vote, would be expensive and lead to increased unemployment.

"The House dealt a devastating blow to small businesses today, risking record growth, job creation, and already increasing wages," Juanita Duggan, president and CEO of the National Federation of Independent Businesses, said in a statement. The NFIB is the leading advocacy organization for small businesses.

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A representative for the restaurant industry also criticized the bill.

"Thousands of restaurant industry employees, leaders and community members have called and emailed Congress to share their concerns about how H.R. 582 would cripple small- and family-owned businesses," National Restaurant Association spokesperson Sean Kennedy said in a statement. "H.R. 582 is the wrong wage at the wrong time, implemented in the wrong way."

Kennedy called instead for "a commonsense approach to minimum wage."

The National Retail Federation likewise emphasized the bill's potential consequences.

"This unprecedented proposal to increase the minimum wage by 107% is a one-size-fits all approach that would lead to unintended consequences for American workers and the businesses that employ them," David French, senior vice president of government relations at the NRF, said.

The National Association of Manufacturers also expressed its opposition to the minimum wage increase in a letter to the House before the vote.

"H.R. 582 creates new economic headwinds for manufacturers—ignoring the sector's investments in skills training, competitive compensation, and generous benefits—all at the expense of millions of American workers," Patrick Hedren, the association's vice president for labor, legal and regulatory policy, said.

The NFIB's Duggan encouraged the Senate to kill the bill. Indeed, Senate Majority Leader Mitch McConnell is unlikely to bring up the legislation in his chamber. The White House pledged that President Donald Trump would veto it if it made it to his desk.

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Increasing the minimum wage to $15 has been a major topic of discussion in the 2020 presidential race, with many Democratic candidates backing the proposal, and will likely remain prominent in the campaign even if the Senate declines to take up the bill as expected.

Areas of impact

The Congressional Budget Office estimated raising the minimum wage to $15 from its current level of $7.25 could cost 1.3 million jobs, while increasing wages for 17 million workers.

Minimum wage increases generally have the greatest impact on workers in low-wage industries

Impacted workers include those in restaurants, bars, hotels, frontline retail -- like cashiers -- and many in health care, according to Heidi Shierholz, senior economist and director of policy at the Economic Policy Institute. Shierholz is also former chief economist for the Department of Labor. Workers in smaller-scale manufacturing and day care are also impacted, said David Neumark, an economist at the University of California, Irvine.

But a national increase to $15 would likely affect a much wider swath of workers, especially in low-wage regions, according to Neumark.

"If we really go to $15 ... the effects would be broader than what we've seen in the past," Neumark said. In the South, half of the workforce could potentially be affected, in a much wider range of industries, he said.

Shierholz said that, despite the job losses the CBO predicted, the office's analysis reflects that the benefits of raising wages would greatly outweigh the costs. She highlighted both the benefits for low-wage workers and businesses.

"One of the things that a minimum wage does is get money in the pockets of people who are very likely to have little choice but to spend it," Shierholz said. "Their wages go up, they're going to spend the money, that boosts demand," which helps industries broadly.

Businesses in favor of an increase

Although major business organizations quickly came out to criticize the House's move, some of the country's largest businesses in impacted sectors are outliers on this issue.

McDonald's stopped working with the National Restaurant Association to lobby against the wage hike in March, and the company came out in support of introducing the wage increase in all industries.

Amazon raised its minimum wage to $15 for U.S. workers in October 2018. CEO Jeff Bezos challenged rivals to raise their wages to $15 or higher in April.

Walmart CEO Doug McMillon said the current federal minimum wage is "too low" at the company's annual shareholders meeting in June. "It's time for Congress to put a thoughtful plan in place to increase the minimum wage," he said.

Walmart's competitor, Target, raised its minimum wage to $13 in April, and said it plans to hit $15 by the end of 2020.

Correction: Juanita Duggan is president and CEO of the National Federation of Independent Businesses. An earlier version misspelled her name.

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