The Raise the Wage Act (H.R. 582 & S. 150) would lead to massive job losses, lost production, and income reduction on a national scale, according to a newly released economic forecast from the NFIB Research Center. If the bill becomes law, there would be approximately 1.6 million fewer jobs in the United States in 2029, with more than half of those private sector losses taking place at small businesses.
The cumulative real output loss, as a result of the Raise the Wage Act becoming law, would exceed $2.0 trillion, and the cumulative real GDP loss would exceed $980 billion over the ten-year forecast window. Americans will have $103 billion less in disposable personal income in 2029.
Small businesses would be particularly hurt by the Raise the Wage Act. More than 900,000 jobs would be lost, or 57 percent of all private sector job losses, at companies with fewer than 500 employees. Nearly 700,000 jobs would be lost, about 43 percent of all jobs lost, at businesses with fewer than 100 employees.
“The negative impact of the proposed legislation would fall disproportionately on small employers, which are less likely to have the cash reserves or profit margins to absorb the increase in labor costs than larger businesses,” states the study, “Economic Effects of Enacting the Raise the Wage Act on Small Businesses and the U.S. Economy.”
The employment reduction in retail, food service, and administrative support industries account for more than 392,000 lost jobs, or approximately 24 percent of total forecast jobs lost. The retail trade industry is forecast to have more than 162,000 fewer jobs by 2029. Food services and drinking places would have more than 165,000 fewer jobs and administrative and support services would see a decline of more than 85,000 jobs.
“While low-wage workers able to find or retain a job would benefit from the proposed legislation, such gains come at the expense of a very large number of low-wage workers who would lose their jobs due to businesses unable to absorb the costs of a higher minimum wage, resulting in net negative employment and output effects,” the study notes.
The NFIB Research Center’s BSIM model was employed to forecast the economic impact this tax will have on small businesses on a national scale. The national-level forecasts as well as the underlying assumptions are contained in the full report available on the NFIB Research Center website, www.nfib.com/research.