As part of a nationwide income inequality political agenda that stems from the Occupy movement, many states are considering increasing their minimum wage. More extreme proposals call for wages of $15.00 per hour, but even $10.00 or $12.00 per hour minimum wage rates will have an impact on businesses in the attractions industry.
Average employee wages in the attractions industry are significantly above minimum wage. If a state with a moderate attractions industry presence increases the minimum wage from $8.00 per hour to $10.50 per hour, labor costs will increase by 10 percent (assuming wages above $10.50 per hour are not raised). If that same state increases minimum wage to $15.00 per hour, labor costs will increase nearly 60 percent.
Small and seasonal employers in particular will face the most adverse impact of a wage hike because of a limited ability to increase sales and few options to mitigate the increased labor costs. In order to accommodate added costs, small and seasonal businesses will be forced to raise prices, introduce efficiencies when possible, or reduce labor costs by cutting jobs and hours.
Most studies find that, when the minimum wage increases, employment goes down. A higher minimum wage also prices unskilled and inexperienced workers out of the job market and dampens the demand for new employees. An increased minimum wage will drive up the cost of entry-level jobs, making them harder to find for inexperienced workers and more attractive to better qualified candidates against whom the less experiences workers can’t compete.