The proposed $15 minimum wage could be devastating for small business owners.
Lawmakers in Cleveland recently proposed raising the city’s minimum wage to $15 an hour.
According to a report from Cleveland.com, if this minimum wage increase is approved, Cleveland will then be tied with Seattle for the highest minimum wage in the U.S. However, Seattle’s new minimum wage will not reach $15 per hour for small businesses until 2021, while Cleveland’s wage increase would be imposed on all businesses that employ more than 25 individuals beginning in January. The effect of this drastic wage increase could be devastating for small business owners.
Economists have been invited to speak to the city council on the possible consequences of the new wage, while a group of supporters were also given the opportunity to speak, regarding the economic inequality that is apparent in the city, according to Cleveland.com.
A newly formed local group, Raise Up Cleveland, assisted the Service Employees International Union in collecting enough voter signatures to compel the city council to introduce the legislation. Cleveland.com reported that the council will have the opportunity to vote on the legislation, but, if council votes down the ordinance or introduces an amended version, the petitioners will have the option to put the original language on the ballot for Cleveland voters.
Cleveland.com reported that Bill Kosteas, chair of the economics department at Cleveland State University, and Albert Sumell, associate professor at Youngstown State University, have identified three aspects of the proposal that could negatively impact Cleveland’s economy:
- The magnitude of the increase. The state’s current minimum wage is $8.10 an hour, and, according to the report from com, a minimum wage increase of this size has never been done anywhere in the world.
- The geographic scope of the increase, boosting only Cleveland’s minimum wage, not the rest of the metro area or the state, would create even greater wage inequality.
- The timeframe in which the change would take place is much too small. Every other city that has instituted minimum wage increases has done so over a period of time, giving employers a chance to adjust and minimize losses.