Like a little snowball tumbles along picking up mass and speed, the trend of local and statewide laws arbitrarily boosting minimum wage is being felt by veterinarians and other small businesses nationwide.
California’s salary legislation was highly publicized in 2016 when Gov. Jerry Brown signed the law to gradually lift the state’s minimum salary to $15 per hour. That news coverage led to protests across the nation, primarily by fast-food workers demanding the same $15 per hour wage.
In many small cities like Flagstaff, Ariz., copycat minimum-wage laws were quickly passed by the liberal majority in this northern Arizona college community. The result, according to the Arizona Daily Sun, is business closures and at least one business reporting a salary budget increase of 84 percent.
While the idea of boosting the minimum wage seems like an appealing way to lift low-income workers out of the poverty level, the end result may be fewer jobs available for the unskilled in the future.
In a July 2016 article in the San Francisco Chronicle, David Neumark, economics professor and director of the Economic Self-Sufficiency Policy Research Institute at UC Irvine, said there are tradeoffs in boosting mandatory minimum wage laws.
According to Neumark, raising the minimum wage gives employers incentives to produce what they can with fewer unskilled workers, which leads to lower employment.
“The adjustment is not so much through firing people but through slower hiring,” Neumark said.
Neumark has published dozens of research articles about minimum wage and testified before Congress on the topic. His research shows that minimum wage disproportionately affects employment opportunities for unskilled workers because they tend to have higher job turnover.
“The research sort of says what minimum wages do is move money around low-income families,” Neumark said. “Some earn more. Some lose their jobs.”
While we are not aware of how veterinarians view rapid increases in the minimum wage in their areas, our clients are telling us they are being much more cautious in adding new staff and are becoming more aware and proactive in controlling salary expense in their monthly budgets.
Where we believe the government mandated salary increases will have the greatest impact is with veterinary practices providing low-cost spay/neuter and vaccine services.