Small: Where do businesses get their money?

Where do businesses get their money?

By Jonathan Small

Under State Question 832, the minimum wage in Oklahoma will more than double from $7.25 an hour to $15 an hour by 2029 and then continue rising at a rapid pace every year based on the cost of living in the nation’s largest urban centers.

Even supporters of SQ 832 concede it will increase Oklahoma employers’ labor costs by $783 million annually. They tout this as a good thing, but ignore a fundamental question: Where do businesses get their money? The answer: from their customers.

Ultimately, every dollar an employer receives comes from a customer. Money doesn’t grow on trees, as your dad probably told you. This economic reality escapes the supporters of SQ 832.

If you increase labor costs by $783 million via government mandate, you’re effectively voting to increase the cost of goods and services by $783 million annually.

And the added costs will grow over time, because SQ 832 not only raises Oklahoma’s minimum wage to $15 an hour but also continues to increase it every year based on increases in the cost-of-living in the nation’s largest urban centers, as measured by the U.S. Department of Labor’s Consumer Price Index for Urban Wage Earners and Clerical Workers.

That would effectively tie Oklahoma’s wage mandate to the cost of living in places like New York City or San Francisco. While SQ 832 would initially mandate that entry-level jobs pay $15 an hour in 2029, an analysis by The State Chamber of Oklahoma and Oklahoma Farm Bureau found SQ 832 would put Oklahoma’s minimum wage on a fast track to $35.61 per hour and continue rising thereafter.

A wage mandate that sees no difference between Boise City, Oklahoma, and New York City is one completely untethered from reality. The cost of employing workers will rapidly exceed the value they can provide to an employer, because there is a price after which customers stop purchasing goods and services from you.

What happens then? Jobs are eliminated. Hours are cut. Benefits are reduced or eliminated.

SQ 832 will give Oklahoma the worst of all worlds. We’ll have ever-higher prices and less opportunity for employment. For those entering the workforce for the first time, that’s a recipe for disaster. Your bills will go up, but your ability to earn enough to pay your bills will decline.

This is not a complicated question. If you want to pay more for less, then SQ 832 is for you. But if you want to keep Oklahoma a low cost-of-living state with job opportunities for all, you should vote “no.”

There’s a reason why supporters of SQ 832 change the subject when you ask who’s going to cover the cost of these arbitrary pay increases. Because the answer is, “You will.”

Jonathan Small serves as president of the Oklahoma Council of Public Affairs.