Increasing the Minimum Wage: Bad for Business and Consumers

Just like our Right-to-Work law, Virginia's minimum wage rate is another reason why so many businesses invest in (or relocate to) our Commonwealth.Today's Wall Street Journal illustrates some of the economic challenges that have resulted from Oregon's 2002 raise in the minimum wage:

Some businesses say they have avoided expanding in Oregon because labor costs have risen, the sort of change in behavior at the margin that foes of a minimum wage worry about.

At Petite Provence eatery in Portland, co-owner Didier Blanc says the minimum wage, while paid only to servers, has had an "aftershock effect," forcing him to raise wages for all employees. While servers earn the minimum, bakers and cooks earn between $9 and $12 an hour. The costs are passed on to customers.

"After it goes up, everybody at $9 an hour and above will want some kind of raise," says Mr. Blanc. "We have to pass it on in our prices because it goes straight to our bottom line."

"It's important to take care of people in minimum-wage jobs, but what's missed is the impact on the economy and job creation," [another Portland business owner] says. "It's not feasible to hire 10 people, so I'm just going to hire seven." He says labor costs scotched plans to open a restaurant in Bend, Ore., a tourist hotspot.