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What is the most important provision for employers in comprehensive immigration reform legislation?


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Minimum Wage

Position: OPPOSE

Status: Legislation Pending

The Fair Labor Standards Act of 1938 established a $0.25 minimum hourly wage for covered, non-exempt employees. Before 2007, the federal minimum wage had stood at $5.15 for nearly 10 years. Since then, minimum wage has been raised three times; it currently stands at $7.25 per hour. In February 2014, President Obama signed an executive order raising the pay for employees of federal contract workers to $10.10 per hour. A month later, he directed the U.S. Department of Labor (DOL) to amend its rules regarding overtime pay for salaried employees currently classified as “executive or professional.”

Last year, Senate Health Education Labor and Pensions (HELP) Committee Chairman Tom Harkin (D-IA) and House Education and the Workforce Ranking Member George Miller (D-CA-31) introduced legislation  which would increase the minimum wage to $10.10 over three years and index future increases to the consumer price index. In February 2014, the Congressional Budget Office (CBO) estimated this proposal would reduce employment by about 500,000. On April 30, the Senate rejected a Motion to Proceed on S. 2223 by a vote of 54-42. The bill needed 60 votes to proceed.

Recently, the City of Seattle passed an ordinance which sets a $15 hourly minimum wage for its workers—the highest in the nation. In fact, in just over a year, at least six other cities and counties have mandated minimum wages as high as $15, and several more have legislation in the works.

While advocates of minimum-wage increases hope to support lower class workers by mandating higher wage rates, this form of government overreach harms employers, employees, and the economy in a rippling effect that has both direct and indirect consequences.

The minimum wage directly affects small businesses because a large amount of their earnings go directly to pay for operating expenses, such as equipment, supplies, lease or mortgage, credit lines, inventory and employee wages and benefits. By raising the cost of labor, employers are incentivized to use less labor, therefore decreasing the number of positions available—particularly in regards to entry-level workers. An increase in minimum wage also restricts employers from offering their most valuable employees competitive wages because of the artificially high minimum for unskilled workers. This increased cost will also cause BURGER KING owners to reduce hours, decrease jobs and increase prices, resulting in increased unemployment and inflation.

NFA believes an increase in the minimum wage hurts, rather than helps, low income workers. Increased costs will cause employers to reduce their workforce, thus lowering the demand for lower skilled workers.  As such, a higher minimum wage will force employers to stop expanding or downsize, directly affecting jobs in the community and impacting unemployment rates.