As the Fight for $15 spreads across the country, an initiative to raise Florida’s minimum wage may appear on the state’s ballot in 2020. The Florida $15 Minimum Wage Initiative would increase the minimum wage in Florida by $1 each year until reaching $15 in the year 2026. If the measure passes, it could have devastating consequences for many of the approximately 183,000 Floridians earning a minimum wage as well as wreak havoc on the state’s tourism industry.
The traditional economic theory surrounding minimum wage policies is clear: if regulations raise the cost of labor, those costs have to be offset somewhere. Findings from empirical research on minimum wage effects are mixed and may depend on the size of wage increases. However, large hikes in minimum wages are broadly found to have negative consequences for workers and consumers. In some cases, employers reduce the number of workers they employ or cut back hours. Other businesses raise prices for consumers or close stores. The consequences under each of those outcomes are worst for people with low incomes.
Nationally, minimum wage workers tend to be young and concentrated in service, leisure, and retail occupations. Theme parks, hotels, shops, and restaurants are all important pieces of the tourism economy and employ many of Florida’s minimum wage workers. Those businesses are vital to Florida’s economy, which relies heavily on tourism. In fact, tourism is the largest industry in Florida with an economic impact of nearly $86 billion annually.
If the proposed ballot initiative is successful, layoffs, hour reductions for workers, business closures, and price increases could all hurt the tourism industry in the state and devastate the low-income families that minimum wage policies are intended to help.
Florida currently has a minimum wage of $8.46 per hour. It is one of 29 states with minimum wages that are higher than the $7.25 per hour minimum required under federal law. Unlike the federal minimum wage, which only increases through legislative action, Florida’s minimum wage is adjusted annually to account for changes in the Federal Consumer Price Index. Given that Florida’s median hourly wage is $15.77, increasing the minimum wage to $15 an hour would raise the cost of labor for nearly half the state’s workers.
Despite the minimum wage in Florida rising steadily over recent years, the market is outpacing state and federal standards, with several large employers already paying at least $10 an hour for entry-level positions. Amazon, Target, Disney, Costco, Wells Fargo, and Bank of America—just to name a few—say they plan to pay minimum hourly wages of $15 or more by 2021. These developments demonstrate the ability of the market to self-adjust and provide higher wages where possible. Firms that haven’t voluntarily raised wages are generally smaller and often cannot afford to raise wages beyond mandated minimums––especially not as high as $15 an hour.
Minimum wage increases are a prime example of well-intended policy gone awry. The aim to help workers often ends up reducing employment and raising prices by mandating higher wages. Rather than raise the minimum wage, state and local governments should seek ways to eliminate regulatory barriers to job creation, career advancement and wealth creation.