This week’s question: Workers around the country — including in Miami — recently held protests asking for a $15 dollar minimum wage. Cities such as Seattle and Los Angeles have agreed to adopt one. What would the effect of a $15 minimum wage be on the economy in South Florida, where it currently stands at $8.05?
Such a drastic change in minimum wage at once could have the impact of higher unemployment. In a (mostly) service-based economy such as South Florida’s, I actually believe the risk of higher unemployment will be more than offset by the lifting of many families above poverty levels. Nonetheless, it first should be studied for the economic impact to industries that might need competitive labor and that could move elsewhere (cruise lines, or export/import logistics, for instance).
Daniel Ades, managing partner, Kawa Capital Management
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To go from the current $8.05 minimum wage to $15 would have a very negative impact on the South Florida economy even if it’s raised to that within a couple of years. That would put a burden on many businesses here. It’s too high of a starting wage for most entry-level jobs. I’m for raising the minimum wage every year, but it must be gradual. Minimum wages are meant as starting salaries for some entry-level positions, and I believe if a minimum wage salaried new employee proves to be a good and productive worker within a short time, that employee should get a raise immediately.
Richard Behar, founder and CEO, Capitol Clothing Corp.
It’s about time. Salaries have been stagnant for decades. I feel this raise will ultimately have a positive impact on the South Florida economy. When someone gets a raise, they are naturally inclined to be more productive and committed, and their increased spending power allows them to invest more in the local and regional — if not global — economy.
Carmen Castillo, president and CEO, SDI International
I think to almost double the minimum wage in one swoop would be devastating to Florida’s economy and to almost every economy. That would create an enormous increase in cost that many companies could not manage. Like all things, increases to the minimum wage should happen, but they should happen more gradually in order for the companies to assimilate the added expenses alter their pricing over time and not have the result of the minimum wage increase be massive layoffs and higher unemployment.
Alicia Cervera Lamadrid, managing partner, Cervera Real Estate
The $15 hour [minimum wage] sounds fair, however this will have a dramatically negative impact on service-based small businesses in South Florida. It will double the salaries for employees, which [could] lead to many businesses having to close. ... Florida has the largest concentration of small businesses in the nation. Manufacturing businesses like the ones we support at EcoTech Visions will thrive because that is the base salary within that industry. This could be a good thing for the state pushing us to shift from a service economy to a product-based one. There is no better time than now, given the increased opportunities for trade throughout the Americas, Africa and Asia as a result of the Panama Canal opening up last year, the deep dredging of our ports and the growing tech and maker movement in South Florida.
Pandwe Gibson, executive director, EcoTech Visions
I think a gradual increase of minimum wage to $15 would be a great thing for the South Florida economy. This would go a long way to reducing poverty and improving the lives of those who work so hard for so little. It will put spending power in the hands of thousands, fueling the economy and bridging the income disparity gap that plagues our community.
Julie Grimes, managing partner, Hilton Bentley Hotel
I feel that everyone deserves the opportunity to have a quality and sustainable life for their families and themselves and that can only happen with an increase in the minimum wage. We will feel the effects everywhere.
Felecia Hatcher, co-founder of Feverish Gourmet Pops
We should gradually raise the minimum wage to a “living wage,” which is currently between $13 to $14. Eventually, we would reach the $15 mark in a more gradual manner. The effect will be that people will be able to live better lives without so much dependency on subsidies such as food stamps and low-rent housing. With more disposable income, our economy would flourish and unemployment would decline as it has in Seattle and Los Angeles. $8.05 won’t even buy an illegal worker from the front of a Home Depot … even they want a $12 minimum to leave their grassy nook. (Yes, I have proof.)
Ann Machado, founder and president, Creative Staffing
A $15 minimum wage would be a mistake here. It would primarily impact the hospitality, maintenance and food-service segments, which are mostly small businesses. This will lead to a mixture of higher prices (i.e., inflation) and employment cutbacks. What happens when a Subway franchisee has to pay around $150,000/year more to her/his staff of five people? Do they just shut down or does the $5 Footlong become an $8 Footlong, which costs customers more?
Victor Mendelson, co-president, HEICO
Each city and economy is different, so it’s difficult to generalize. In South Florida, an increase in the minimum wage would certainly affect a number of communities positively but might negatively impact some of our businesses, so it needs to be looked at closely. We are proud to say that we have committed to paying $12.83 for construction jobs at Miami Worldcenter.
Nitin Motwani, managing principal, Miami Worldcenter Associates
The issue of raising the minimum wage comes down balancing the need to provide our workers a living wage and, at the same time, how to sustain a viable commercial enterprise with rising fixed costs. Profits are not the heroic purpose of most businesses, but profits are necessary to keep businesses going. In most businesses, there is a ceiling for what a consumer is willing to pay for a product or service, so the cost of labor, as a whole, has to be managed. Radical and sudden increases in pay rates can have a chilling effect on personnel count and exploration of outsourcing initiatives, which would have a negative effect in South Florida. Increase in wages is important so that more can benefit from the upswing in the economy, but increases over a reasonable period of time seems to be the appropriate way to ensure steady growth of individual businesses at the unit level and the economy as a whole from a more macro point of view.
Abe Ng, founder and CEO of Sushi Maki
The answer is very complicated and many variables need to be analyzed with assumptions based on real data. The only thing that I am certain about is that if it happened overnight, it will be a disaster for everybody in the short-run, especially the minimum-wage recipient.
Todd Oretsky, co-founder, Pipeline Brickell
I am very much for a living wage and believe it has multiplier effects and boosts morale, productivity and service. However, the cost of living in Seattle and Los Angeles, for example, differs from the cost of living in Miami, so I think the minimum wage should be adjusted in relation to the local cost of living.
Eduardo Padrón, president, Miami Dade College
Everyone that works a full-time job should be able to earn a living wage calibrated to geographic specifics like the cost of living and consumer price index. If a living wage — whatever the number — were adopted in South Florida, I think it would result in greater prosperity and lower income inequality for our community at large.
Joanna Schwartz, CEO and co-founder, EarlyShares
The effect would be dramatic if we double the minimum wage. Although it would certainly benefit those workers earning minimum wage, it could also affect the cost of services to consumers.
Dave Seleski, president and CEO, Stonegate Bank
Potentially very positive if skills, productivity and revenue increase without any significant loss of jobs. We have a substantial service-oriented economy here in South Florida. Otherwise, the total economic impact would probably be a wash.
Darryl K. Sharpton, president and CEO, The Sharpton Group
It would have a mixed impact at first as some organizations would have to reduce the number of employees to stay competitive, while others might increase their prices to stay in the market. However, a higher minimum wage would have a positive impact as lower wage earners would be able spend a higher proportion of their income, which then goes back into the local economy.
Gillian Thomas, president and CEO, Patricia and Phillip Frost Museum of Science
Support for increasing the minimum wage seems to be overwhelming, but it’s a complicated issue. Some research states states that have increased the minimum wage have seen faster economic growth. A danger to consider is that some companies will have to reduce workforces and/or pass on higher prices to consumers to account for such a significant increase to the minimum wage.
Alina Villasante, founder, Peace Love World clothing
Companies that employee large numbers of minimum-wage workers would probably reduce the size of their workforce. I think the talk of the $15 minimum wage misses the real point, which is training the American workforce to do more than no-training-required, minimum-wage jobs. I’ve read that more than 40 percent of the U.S. workforce makes less than $15 per hour. Minimum-wage jobs are not intended to provide a comfortable middle-class lifestyle. In our business, we see subcontractors in the building trades who are always in search of trained workers. Let’s figure out how to create a better-trained workforce, and the minimum wage will be less of an issue.
John Wood, president, Amicon Construction