“Local living wage ordinances have a negative economic impact on a community because they reduce employment, hinder economic development and hurt small businesses,” said Barry Cargill, vice president government relations for SBAM.
Local “living wage” ordinances generally require city contractors, many of them small businesses, to pay their employees a wage that is significantly higher than the federal minimum wage as a condition of doing business within the city.
“A high local minimum wage increases labor costs,” Cargill said. “When labor costs rise, new entry level jobs are not created and employer-provided benefits such as health insurance are scaled back.”
Cargill said “living wage” ordinances also hinder economic development. “When a business looks to locate or expand its operation, it investigates a community for, among other things, its propensity to impose unreasonable regulations on businesses. The very action by a city to regulate wages can be enough to scare investors away.”