Florida Voters Approve $15 Minimum Wage Increase by 2026
Among several amendments on the Florida ballot this election cycle, one amendment includes a minimum wage increase to $15 per hour by the end of 2026.
Floridians voted in favor of Amendment 2 last week, which incrementally increases the minimum wage each year until it reaches $15 per hour in 2026. Amendment 2 required 60% approval from Florida voters. With 100% of the ballots reporting, Amendment 2 barely passed with 60.8% approval of the increase.
The first increase will go into effect as of September 30, 2021, with an increase to $10 per hour. The minimum wage will increase annually by $1 until it reaches $15 per hour in 2026.
How Does Minimum Wage Affect Small Businesses?
This is a significant development for small business owners throughout the state. While many people champion this as a win for Florida workers, it undoubtedly increases labor costs for business owners. This, in turn, may actually hurt workers down the road.
Many businesses and organizations throughout the state have voiced their concerns about these increases, claiming that this hurts their ability to pay their employees without laying them off. High minimum wages have unintended consequences, including higher prices and increased automation. As labor costs increase, businesses will search for new ways to mitigate these costs through efficiencies such as job automation. Consequently, job automation may displace workers as technology improves.
Small businesses have a difficult time competing with larger companies as it is; any further increases in costs makes it extremely difficult for small businesses to stay competitive with large companies. Large companies have the resources to pay higher wages, as well as research and develop new automated technology to reduce labor costs.
Chambers of commerce throughout Florida have voiced their concerns that now is not the time to increase the minimum wage, especially after recent shutdowns caused so many businesses to shutter and lay off employees.
This increase is especially important to Florida’s strong tourism industry. The Florida Chamber of Commerce indicates that this industry will be severely impacted by Amendment 2 due to recent struggles during the pandemic. The chamber states that “tourism-related businesses were forced to lay off an average of 73% of their workforce over a three-week period” during initial shutdowns in March and April.
Economic Analysis of Amendment 2
Economists Dr. William Even and Dr. David Macpherson conducted an in-depth economic analysis on the effects from passage of Amendment 2 in Florida and discovered some startling results of a 75% increase in the minimum wage. The economists estimate that 158,449 jobs will be lost due to the mandated increase, and these are conservative estimates. The hardest hit industries include restaurants, tourism, retail, and educational/healthcare/social services. These sectors account for the largest areas of employment in Florida.
Our previous minimum wage article from September outlined several major arguments for and against minimum wage increases. As we provided that Amendment 2 was likely to pass in Florida, we advised small businesses to start planning for the future for these increased labor costs.
This is one of the most difficult times for small businesses in history. As a small business ourselves, we understand the overwhelming challenges that are prevalent in Florida’s small business community right now. If you have any concerns at all with your small business after this increase, please give us a call. We are more than happy to help you.