In Wednesday’s letters to the editor column, Robert Hebert made an outrageous statement that implies that raising the Louisiana minimum wage from $7.25 to $9 would likely “raise the price of items purchased by 24%.” The actual inflation impact on Louisiana residents from the proposed increase is likely about 100 times less than Hebert would have the casual reader believe. As a real world example, both Walmart and Target increased their minimum wage in the past two years from $9 to $11 — a 22% increase — without any noticeable price increases for items in their stores.
It is true that businesses that employ low-income workers will try to raise prices to compensate for the wage hike, but businesses that employ few if any such workers have no reason to increase their prices. A comparative example of the proposed Louisiana increase occurred in 2013 when San Diego increased its minimum wage 25% to $10 an hour. The impact on restaurants, which employs large numbers of low-income workers, was studied and prices to consumers were found to have increased by 1.45%. The inflationary impact was so insignificant that San Diego has continued to adjust the minimum wage upward, and it now stands at $12 an hour.
Wage erosion is the real threat to Louisiana businesses. With consumer spending fueling over 70% of business activity, wage erosion is like a slow-growing cancer that threatens to starve businesses from their lifeblood. And the resulting impact of wage erosion on lower-income families has resulted in massive increases in “entitlement” programs such as food stamps, the earned income tax credit, and countless government programs to combat poverty, which now costs the American taxpayer hundreds of billions of dollars per year. Even more troubling is the impact of poverty on childhood development, family stability and increasing reliance on government programs that erode work ethic. The minimum wage is about the only tool we have to combat wage erosion and raising is long overdue.