Florida Projected to Lose 158,000 Jobs Due to Proposed Amendment 2

Wednesday, September 16, 2020, 3:54 pm

Last week, economists Dr. William Even, Miami University, and Dr. David Macpherson, Trinity University, released “Estimating the Impact of a $15.00 Minimum Wage in Florida.” The study analyzes the impact of passing Amendment 2, a ballot measure which would amend the state’s constitution to raise the minimum wage to $10 in 2021 and annually to reach $15 in 2026.

Using a methodology that matches the Congressional Budget Office’s analysis of proposed minimum wage policies, the economists determined that the passage of Amendment 2 would result in 158,000 lost jobs in the Sunshine State. Such a policy would cause further detriment to already-struggling hospitality businesses and other industries employing significant numbers of minimum wage workers, due to struggles related to COVID-19 shutdowns.

The authors provide some key findings related to the impact of enacting such a minimum wage increase in Florida:

  1. The minimum wage rate grew by 6.3% between 2015 and 2020, but if enacted, Amendment 2 would raise it by 75% through 2026. Due to this sharp spike in minimum compensation rates over the next few years, impacts are projected to be significant.
  2. Raising minimum wage to $15 in other areas, with higher costs of living, has historically had negative impacts on employment. The authors cite a study by Dr. David Neumark, University of California-Irvine, which concludes that overall, higher minimum wage standards result in job loss for the lowest-skilled workers. In addition, they mention a Harvard Business school study which finds that in San Francisco, each $1 increase in the city’s minimum wage resulted in a 14% increase in the probability that a restaurant in the area would close, taking with it jobs for minimum wage workers.
  3. Projected job losses are most pronounced in the restaurant industry, with at least 43,000 jobs lost by 2026. Almost 60% of these restaurant jobs are held by tipped employees, whose jobs may be at even higher risk due to raises in the tipped minimum wage, also present in the Amendment 2 ballot initiative.
  4. Projected effects and job losses will be heavily concentrated in certain metropolitan areas, including Miami-Fort Lauderdale, Orlando, and Tampa-St. Petersburg. The Miami-Fort Lauderdale metro area could face nearly 32% of the total projected job losses. The Tampa-St. Petersburg area would account for nearly 16%, and Orlando would account for almost 12%.
  5. Younger workers will face the largest impact, as well as women. Those aged 16-24 are estimated to experience nearly half of all job losses due to rising minimum wage. Women will also bear 60% of potential job losses. Nearly 30% of jobs lost will be attributed to non-white workers.
  6. Even and Macpherson describe these estimates presented in their study as “conservative.” While they estimate that 158,000 jobs in the Sunshine State could be lost due to this policy, the authors indicate that any future fluctuation in earnings growth for businesses employing minimum wage workers could exacerbate the effects of these increases on job loss. Slower-than-expected earnings growth in the hospitality industry, for example, could result in as much as 181,000 total jobs lost. With recovery from COVID-19 still a long road ahead, the added obstacle of minimum wage hikes may have debilitating effects on businesses’ ability to stay open and employ their workers going forward.

While many jobs are projected to be affected by proposed minimum wage changes in Florida by 2026, economists Even and Macpherson suggest that the state will experience significant employment loss for low-wage workers as a result. Many states across the country have recently implemented legislation providing for similar minimum wage increase schedules, including New York, Connecticut, Massachusetts, New Jersey, Maryland, District of Columbia, Illinois, and California. But what about states that may be further behind in cost of living inflation, business earnings growth, and other economic factors?

Looking to the future, the Biden-Harris campaign platform seeks to enact a $15 federal minimum wage. However, if Florida alone experiences these losses, what will the impact be on a national scale?