The adverse economic impact of raising Michigan’s minimum wage to $10 from $7.40 per hour outweighs the benefits, say a majority of economic experts and business executives who participated in a recent policy forum through Oakland University’s School of Business Administration in Rochester Hills.
In contrast, the majority of consumers participating in the survey say they believe the benefits the increase would bring to low-skilled workers are greater than the costs, which may include lost jobs, higher prices, or less profits for business.
“As far as the consumers are concerned, I think that they may be not as aware of the long-term economic effect (of increasing the minimum wage),” says Jonathan Silberman, professor of economics at Oakland University. “Business executives, of course, would be very aware of the potential costs and how it will impact their business.”
Silberman says business experts and executives cited concern with the impact the minimum wage would have on employment. “They’re concerned that employers may substitute capital for labor. For example, if you go to a restaurant you may place your order using an iPad on the table, (meaning) the business won’t need as much staff,” he says.
Of those who disagreed with the increase, several felt that teenagers and others looking for an entry point into the labor market would be among those most adversely affected by the minimum wage increase, Silberman says.
In turn, the White House has been driving the minimum wage hike as a way to get their supporters to the polls in November, given the problematic rollout of Obamacare. President Obama recently touted such companies as Costco and Zingerman’s Deli, which pay their workers more than the minimum wage. But Costco generates $2 billion each year in membership fees (which their competitors don’t charge), while Zingerman’s Deli offers sandwiches for as high as $14.
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