Study: 38 percent of private employers will cut workers if minimum wage is raised

June 13, 2012: Job seekers have their resumes reviewed at a job fair expo in Anaheim, Calif. (ap)

WASHINGTON – Thirty-eight percent of America’s private employers say they will lay off workers if Congress agrees to raise the minimum wage to $10.10, according to a new survey by the nation’s largest privately held staffing firm.

Fifty-four percent of employers who are paying their workers the current minimum wage of $7.25 per hour say they would reduce hiring, while 65 percent say they would raise prices on their goods and services to offset the bumps in pay.

Of the 1,213 business and human resources professionals surveyed by Express Employment Professionals last month – which include whose who pay their employees the minimum wage as well as those who do not – 19 percent say they’d fire workers, 39 percent would reduce hiring and 51 percent would raise prices on their services to make up the salary costs.

“As with any such policy change, there are upsides and downsides. But based on this survey, there’s no denying that raising the minimum wage will result in layoffs, reduced hiring, and higher prices at a large chunk of American companies,” Bob Funk, CEO of Express and the former chairman of the Federal Reserve Bank of Kansas, said. “How severe will those effects be? That remains to be seen, but policymakers will certainly want to be mindful of this reality as they legislate.”

Last month, the Congressional Budget Office released a report that said that while raising the country’s minimum wage might boost the incomes of millions of Americans, it would simultaneously mean hundreds of thousands of fewer workers.

According to the CBO, a graduated boost in the minimum wage to $10.10 by 2016 would lead to an estimated decline in employment of 500,000 workers by the second half of that year.

That figure is the central estimate in a range of possible outcomes, but it is more likely than not that the law would lead to less employment.

According to the report, there is a 70 percent chance that the law would lead to anywhere from a slight decline in employment to a decline of 1 million workers.