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Estimate Says Minimum Wage Increase Could Cost 9,100 Jobs in Mississippi

By Evelina Burnett | Published 09 Mar 2014 04:38pm | comments

Mississippi could lose more than 9,000 jobs if the nation’s minimum wage is increased to $10.10 an hour. That's according to an estimate by a state economic analyst who says employers will cut workers to stay competitive. But, as MPB’s Evelina Burnett reports, some argue Mississippians need the raise.

Workers at Classy Chassis in Ocean Springs are washing cars. Owner Bob Wall has six car washes on the Gulf Coast and employs about 85 people, most part-time, most young - this is their first job - most making the current minimum wage of $7.25 an hour.

He worries about what would happen if that minimum is increased.

""They're talking of $10 an hour," Wall says. "I don't know who could support a 25% or 30% increase across the board for labor - I don't know what business could afford that. We certainly couldn't. I think that would be devastating."

Economic analyst Pete Walley, director of the Bureau of Long-range Economic Development Planning at the Mississippi Institute of Higher Learning's University Research Center, says Mississippi workers may also have cause to worry.

He estimates 9,100 jobs would be lost over the next decade in the minimum wage is increased to $10.10 - about 1,750 jobs in the first year.

The industries most affected include accommodation and food service (2,050 jobs); followed by other services except public administration; administrative and waste management ; retail trade; state and local government; health care and social assistance; construction; and professional, scientific and technical services.

Walley says this will happen because businesses will make changes to stay competitive: "If you increase the price of jobs to the business, the first thing they're going to do is say, how do I be more productive if I can't afford this higher wage, and so I will let go of two people, and I'll put that extra work of those two people on other people and try to make them be more efficient. Or I may buy a computer for those two people and show them how to use it, so they will be more productive."

But some argue Mississippians need the financial boost. Ruth Story is president of the Gulfport NAACP. She disputes the prediction that jobs would be lost.

"It does not cause any problems, whereas people are now working two or three jobs just trying to survive, in a country where 46 to 47 million people live in poverty, in supposedly the richest country in the world. I really think it's a disgrace."

The national NAACP has also come out in favor of an increase, arguing, like Story, that when workers have higher wages and more income security, they help create more jobs.

Some economists also agree that raising the minimum wage does not affect job creation, though others will argue the opposite. Economic analyst Walley points to a 2013 study that concluded increasing the minimum wage affects job growth - that is, there is some job growth, but the level of growth is reduced when the minimum wage is increased. He notes that these effects are stronger fo younger workers and industries with a higher proprotion of low-wage workers. 

National polls show most Americans are in favor of lifting the minimum wage, but it's too early to tell if the increase, a contentious political issue, will happen.

The Congressional Budget Office says, nationally, 500,000 jobs would be lost if the minimum wage is increased ot $10.10 - but almost a million families would be raised out of poverty.

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