Orange County Partnership - News

The Pros and Cons of $15 Minimum Wage on the Economy, Site Selection and Business

Although the Biden administration’s proposal to mandate a $15-minimum wage did not make it to the final “American Rescue Plan” that passed Congress, the Orange County Partnership felt a deep dive on the issue was in order as many political observers believe that the issue is far from dead.


Site Selection Group CEO King White recently penned a comprehensive review of the proposal that called for the minimum wage to be increased from $7.25 to $10, $12 or $15 per hour by 2025. White notes in his article entitled “$15 Minimum Wage: The Impact on the Economy, Site Selection and Your Company” that the Congressional Budget Office estimates the minimum wage increase would boost wages for 17 million workers, but will also result in 1.3 million to 1.4 million workers losing their jobs by 2025 if enacted.


Roughly 29 million people of all ages, representing a quarter of the full-time, year-round workforce, had annual earnings in 2018 equal to less than $15 an hour, according to the Current Population Survey Annual Social and Economic Supplement from the U.S. Census Bureau. This is a massive portion of the workforce so the impact on the economy, site selection and your company could be far reaching, White related. It should be noted that New York State’s minimum wage stands at $12.50 an hour for most jobs outside New York City, where the minimum is $15 an hour for businesses with more than 11 employees. Florida recently announced it would increase its minimum wage to $15 per hour by 2025.


Among the seven impacts the minimum wage increase would have on business, the economy and site selection, White noted that small family and midsize businesses will be disproportionately hurt by the extra costs incurred and will likely respond with resorting to worker layoffs to avoid going out of business.


In the retail sector, he predicts that retailers will be forced to invest in new self-service technologies to reduce reliance on front line workers. In the industrial sector, unskilled positions among the more than 13 million workers in this field will likely be impacted the greatest by the use of robotics in the manufacturing and warehouse sectors.


In terms of site selection, White related, “Companies are going to be forced to change their site selection strategies. Historically, companies found 20% to 30% in labor cost savings by locating in tertiary metro areas. If these savings are reduced, then employers will opt to locate in larger metro areas where labor scalability is much better or simply go offshore. As a result, the smaller, tertiary metro areas will see a reduction in job creation and capital investment in their communities.”


For the full Site Selection Group article, go to: