Tags: Minimum Wage | minimum wage | labor costs

4 Industries Where Labor Costs Are Most Impacted by Minimum Wage Hike

By    |   Tuesday, 02 Jun 2015 10:26 AM

National campaigns striving to increase the federal minimum wage to $15 have been growing in popularity, though they often fail to recognize the impact minimum wage hikes have on various industries.

Minimum wage laws were first imposed in 1938 to help workers in low paying sectors of business. Today minimum wage laws are under scrutiny for increasing labor costs to the extent where the policies actually harm workers.

Urgent: Do You Think the Minimum Wage Should Be Raised?

Below is a list of the industries in which labor costs are most affected by increased minimum wage:

1. Fast Food
The fast food industry has the largest number of minimum wage earning workers and is thus impacted most by increased labor costs as result of an increased minimum wage.

The national campaign Fight for 15 originated among fast food workers, though a $15 minimum wage could not be sustained by the price sensitive industry because 26 percent of costs already go towards labor.

An increase in the minimum wage would mean an increase in the price of fast food and a decrease in demand, or a reduction in the industry’s miniscule 3 percent profit margin, says a 2014 Heritage Foundation report.

2. Retail
The National Retail Federation (NRF), the largest retail trade association, opposes an increased minimum wage. David French, NRF senior vice president for government relations, said in 2014 that increased labor costs will “undermine the job prospects for less skilled and part-time workers.”

For Wal-Mart, who employs over 1.3 million Americans, even a small increase in the minimum wage has a profound impact on the cost of labor. To accommodate the increase in minimum wage, Wal-Mart has adjusted its pay structure, lessening the gap between its skilled and unskilled employees, reported Reuters in 2014. Other retailers, such as Gap Incorporated have voluntarily raised their minimum hourly rates.

Vote Now: How Do You Feel About the Minimum Wage?

3. Entertainment
Los Angeles increased its minimum wage to $15 earlier in 2015, inciting a degree of panic in Hollywood. The increased minimum wage and resulting increased labor costs “makes LA a little less film friendly, a little more difficult” Stuart Waldman, Valley Industry and Commerce Association president told Variety.

Los Angeles’ increased minimum wage is expected to drive much of the entertainment industry out of Hollywood and into areas where the cost of labor is more affordable.

4. Transportation
SeaTac, Seattle-Tacoma airport who increased wages after Seattle increased the minimum wage to $15, exemplifies the negative impact of minimum wage hikes on the transportation industry.

Employees reported experiencing new parking fees, layoffs, and fewer benefits as a result of the increased wages said United Liberty in 2014.

Tell Us: Should the Government Raise the Minimum Wage?

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National campaigns striving to increase the federal minimum wage to $15 have been growing in popularity, though they often fail to recognize the impact minimum wage hikes have on various industries.
minimum wage, labor costs
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2015-26-02
Tuesday, 02 Jun 2015 10:26 AM
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