Montana Minimum Wage Increase?

Editors note: Below is an email forwarded to E-City Beat from Great Falls State Representative Lola Galloway.

Dear State Representative Galloway,

As Montana continues to discuss the state’s minimum wage I wanted to call your attention to The Heartland Institute’s newest Research & Commentary examining the economic implications associated with Senate Bill 187.

Heartland’s state government relations coordinator Samantha Fillmore writes:

·         Minimum wage hikes rarely meet the expectations of the policymakers who advocate for them. For example, they do not raise the living standards in any appreciable way for individuals and families, yet illogical wage increases have the propensity to shutter small businesses for good. 

A recent study by the Congressional Budget Office, titled “The Effects on Employment and Family Income of Increasing the Federal Minimum Wage,” examines how increasing the federal minimum wage to $10, $12, or $15 per hour by 2025 would adversely affect employment and family outcomes, especially among teenagers and those at the bottom rungs of the income ladder.

·         According to the study, a $15 per hour minimum wage would boost the wages of 17 million workers. However, it would also push 1.3 million workers out of a job. In almost every scenario, minimum wage hikes result in some workers seeing their wages rise, while many more lose gainful employment.

·         Given the struggles of small businesses over the past year, a minimum wage hike in 2021 could not be more ill-timed. In an analysis based on self-recorded closures in their database, Yelp estimates that 60 percent of U.S. businesses that temporarily closed since the start of the COVID-19 pandemic have shut down permanently.

·         It is unwise for Montana lawmakers to push minimum wage hikes, which as a function of themselves result in businesses closing and increased unemployment, especially when unemployment has skyrocketed due to the ongoing pandemic. According to a brief published by the Congressional Research Service, during the pandemic, the unemployment rate has reached catastrophic levels, unseen in decades..

·         Even more worrisome, the U.S. labor participation rate has fallen precipitously since the onset of the pandemic.

More specific to Montana, almost every major industry had less employed in 2020 due to COVID-19 contraction, with specific emphasis on food, retail, and small businesses, according to the Bureau of Business and Economic Research.

·         Although attempts to bolster a minimum standard of living and protecting low-skilled workers in a pandemic-world are laudable, the overall economic effects of proposed minimum wage hikes would do more harm than good in a time when every state cannot afford additional economic hardship.

I would love to assist you in any way that I can. If you have any questions or comments, feel free to contact me at sfillmore@heartland.org or at 312/377-4000.

Best Regards,
Samantha Fillmore
Government Relations Coordinator
The Heartland Institute

• Category: Economic Development, Montana