2016 off to precarious start for new business in Delaware

In an interesting twist to kick off the new year, lawmakers in Delaware have set off down a dangerous path for the economic stability of our state. It’s left many people wondering if this will wind up being the session that the Delaware Legislature makes its mark as one of the most hostile governing bodies for the Main Street, small-business community on the East Coast.

A partisan public relations machine has been hyper-focused on convincing the public that in order to solve our economic problems, a drastic increase to the minimum wage must be enacted. Delaware’s answer to this progressive ploy, Senate Bill 39, would raise the minimum-wage rate from $8.25 to $15.05. Make no mistake about the consequences of such an action. Not only will it fall short of empowering minimum-wage employees; it will make it virtually impossible to operate a business in this state.

When it comes to minimum wage, it is imperative that, as a society, we are honest about what it truly is. Minimum wage is not now, nor has it ever been, a vehicle in which to feed a family of four. It is an entry-level wage that is earned almost exclusively by teens and young adults seeking work experience and a smooth transition into a career.

Mike O'Halloran

Raising the minimum wage at all, never mind this astronomically high proposal, will have one direct effect. It will result in a loss of job opportunities for those seeking to expand their skill sets. It will not alleviate poverty. It will not empower the middle class. It will leave teenagers wondering what to do after school.

According to a recent study, 63 percent of workers who earn less than $9.50 per hour are the second or third earner in their family and 43 percent of these workers live in households that earn over $50,000 per year. In spite of what the proponents would have you believe, minimum-wage earners are not an impoverished, disenfranchised group of struggling single mothers just trying to make ends meet.

Most are teenagers from middle class families, and many more are sharing the responsibility of providing for their families, not breaking under the burden of putting food on the table.

Poring over two decades’ worth of minimum-wage studies, economists David Neumark from the University of California, Irvine, and William Wascher, a researcher for the board of governors of the Federal Reserve Bank, wrote in a paper submitted to the National Bureau of Economic Research that “ … we see very few — if any — studies that provide convincing evidence of positive employment effects of minimum wages … the studies that focus on the least-skilled groups provide relatively overwhelming evidence of stronger disemployment effects for these groups.”

So, why is it that, in spite of repeated attempts by economists and researchers to demonstrate the devastating impact that an increase will have on employment, we are being bombarded by calls to raise the rate at all levels of government?

Because politicians are betting that the general public won’t pay attention to the details. They are attempting to galvanize a group of constituents that don’t care for economic projections and hoping that none of us notice the increased cost of goods and services that small businesses will be forced to pass on to consumers.

Lawmakers must understand that their feel-good measure of raising the minimum wage under the false pretense of advocating for the poor is nothing more than a self-satisfying gimmick that will ultimately result in fewer jobs for the state with the highest minimum wage in the nation.

It’s time to roll up our sleeves and propose legislation that will reduce regulation and lessen the financial burden to run a business. In doing so, small-business owners will pass on the savings to their employees without being mandated by unnecessary laws.

EDITOR’S NOTE: Mike O’Halloran is the Delaware state director for the National Federation of Independent Business, a nonprofit, nonpartisan organization that gives small and independent business owners a voice in shaping the public policy issues that affect their business.