Is a Rising Minimum Wage in Florida Good or Bad for All Stakeholders?
While 2020 brought plenty of election coverage focused on the national level, there were several state-level issues with a clear impact on the labor market carrying high impact. Florida is a good example. In November, voters there decided to raise their state minimum wage to $15 an hour, becoming the eighth state to implement a $15 minimum wage. Florida is instituting the raise in a measured way, raising its current wage of $8.56 to $10 by the fall of 2021 and raising it a dollar every year until 2026.
The question now is how this change will influence Florida businesses and industries. COVID-19 has resulted in a challenging year for the state, as it relies heavily on tourism, and this industry is one of the hardest hit by the pandemic. In 2020, LaborIQ® by ThinkWhy found that Florida lost more than 200,000 jobs in the tourism industry alone, and its unemployment rate reached as high as 13.8%, on a seasonally adjusted basis, during the height of the pandemic shutdown.
Broader Implications of a Higher Minimum Wage
Why did most voters choose to dramatically increase the state’s minimum wage? Supporters of the increase stated that Florida’s high cost of living warranted a higher wage. (According to the Missouri Economic Research and Information Center, Florida ranked 29th among the states in terms of average cost of living in 2020’s third quarter.) According to the Florida Policy Institute, raising the minimum wage to $15 an hour will increase the income of a quarter of the state’s workforce. Though a higher cost of living requires higher pay, the move could backfire if a majority of businesses aren’t able to pay up.
LaborIQ by ThinkWhy’s analysis of pre-pandemic occupation data found that Florida ranks second nationally in Office and Administrative Support occupations as a percentage of the state’s workforce. The state ranks fourth in Food Preparation and Serving Related occupations and seventh in Building and Grounds Cleaning and Maintenance Occupations. These occupations will likely be impacted by the wage increase, affecting 2.5 million workers.
By raising the minimum wage so drastically, even if slowly, Florida is at risk of becoming a far more expensive state to operate a business. Cruise lines and amusement parks, two of the most significant company types within Florida, frequently deal with regulatory hurdles from multiple government entities, all of which come with an expensive price tag. Disney World alone employs more than 77,000 employees in a regular year and has already laid off a quarter of its workforce. As businesses attempt to rebound from the pandemic, the higher minimum wage may result in companies like Disney employing fewer people to balance their revenue shortfalls and smaller budgets.
Though large companies face hurdles, they may not be the most vulnerable to this regulatory change. Companies such as Disney have the capital and brand strength to weather this storm, but the restaurants, hotels, and other supporting businesses that surround these behemoths are in a far more precarious position. A sharp increase in the minimum wage might be just the thing that slowly and steadily pushes these businesses over the edge as they attempt to keep their business afloat while attempting to ensure they have enough employees to cover the workload.
Getting the Timing Right for a Wage Increase
The need for a minimum wage increase that matches the rise of the cost of living in many cities is no secret. It is not only a state-level conversation, but a national one. The number of Americans living below the poverty line grows daily and combating that issue is important. But in a year of so much uncertainty, a significant change that may threaten the bottom line of companies may jeopardize employment opportunities for the workers the change is supposed to benefit. Florida has an uphill climb ahead in its economic recovery from the pandemic.
Now, businesses large and small will need to factor in wage hikes as they attempt to survive in a less-than-friendly economic climate.
LaborIQ by ThinkWhy continuously forecasts and reports labor data at all levels, measuring impact to cities, industries, occupations and business across the U.S.