Americans Vote on Pot, Higher Pay – Main Street’s Mixed
The 2014 midterm election results are mostly in, and in states both red and blue, a majority of Americans want to be able to freely smoke marijuana and earn higher pay.
But what does Main Street think? FOXBusiness.com checked in with the small business community.
Wages: An Uphill Battle for the Little Guys?
Voters in five states -- Alaska, Arkansas, Nebraska, South Dakota and Illinois -- on Tuesday voted to raise wages for hourly workers. (In Illinois, the measure is non-binding, meaning it won’t immediately affect the current law.)
Small business advocates warn such wage hikes create a disadvantage to smaller players, creating a system of winners and losers at the expense of employers who operate on thinner margins.
“Our members in every state remain strongly opposed to increasing the minimum wage hike because small business owners tend to rely more heavily than their corporate cousins on entry-level, hourly labor,” Jack Mozloom, National Director of Communications at National Federation of Independent Business (NFIB), said.
Mozloom said the jobs that higher wages stand to kill are invaluable not just to business owners, but even more so to bottom-of-the-rung employees – as these jobs are typically “skill-building” positions. According to research from the NFIB and Employment Policies Institute (EPI), thousands of jobs will get cut due to minimum wage hikes. In fact, an EPI study found that over the past two decades, each 10% increase has reduced employment opportunities for the people it’s intended to help – entry-level employees – by as much as 2.3%.
In Nebraska, where voters opted to raise the minimum wage from the federal rate of $7.25 an hour to $9 an hour by 2016, the silver lining is that at least it didn’t go up to the $10.10 President Obama floated earlier this year. That said, Nebraska Chamber of Commerce Vice President of Public Affairs and Policy Jamie Karl thinks the hike has stripped the state of some of its competitive edge.
While a $9 an hour hike may not kill business in Nebraska, taken in the context of recently passed EPA regulations and the Affordable Care Act, Karl says that’s a lot to put on the shoulders of small business and “you know it’s going to sting.”
Employers have two options here, according to Karl: As the cost of doing business goes up, they can either raise prices or eliminate jobs. But as the NFIB’s Mozloom put it, “they can’t wave their wands to make sales happen and increase profits to pay workers.”
For franchises, higher wages bring the fear of not being able to compete. In Seattle, the International Franchise Association (IFA) filed a lawsuit against the city asking that it repeal or rewrite compliance rules. “Anything that impedes growth and competition for franchises is a catalyst for IFA to take a more aggressive stance,” the IFA’s Matthew Haller said.
Currently, franchises have to scale their pay just as quickly as larger businesses, but their independent small business counterparts have more cushion in terms of a deadline for bumping up their pay.
“It’s a tough issue for the business community to take on,” Karl said. “This was truly in the hands of the people … and [when asked to choose], voters will always take a pay raise.”
Marijuana: A Job Creating Machine?
Voters in Oregon and Alaska are following Colorado and Washington’s lead, becoming the third and fourth states to ditch marijuana prohibition for “a more sensible marijuana policy,” as Marijuana Policy Project (MPP) Communications Director Mason Tvert put it.
“With marijuana being successfully regulated and taxed in Colorado and Washington, and with two more states now moving forward with similar systems, it is now clear that there is a viable — and preferable — alternative to prohibition,” Tvert told FOXBusiness.com.
Ballot Measure 2 in Alaska and Measure 91 in Oregon both passed with wide margins, making marijuana possession legal for adults over 21, and which call for the cannabis industry to be regulated and taxed like alcohol. In the nation’s capital, voters approved Initiative 71 to allow adults to have on their person limited amounts of marijuana. And South Portland, Maine, became the second city on the East Coast to make marijuana legal for adults at the local level. (Voters in Portland, Maine, the state’s largest city, passed a similar measure last November.) The only no-go was in Florida: 58% of voters said yes to Amendment 2, which would have approved medical marijuana in the state, but ultimately fell short of the required 60% threshold to pass.
One of the greatest incentives for passing marijuana reform is the potential for job creation and tax revenue. Colorado has taken in about $45 million in total tax revenues from both medical and recreational marijuana year-to-date. According to the latest figures from the Colorado Department of Revenue, recreational sales in August totaled about $34.1 million, compared to $29.3 million in July.
Alexandra Hall, chief economist with the Colorado Department of Labor and Employment, said as of the first quarter of 2014, jobs growth for the cannabis sector totaled 3,523 (second quarter figures will be available in November). She reported that employment in cannabis businesses have seen steady growth in the year since it was legalized in Colorado, with a 14.2% spike from the fourth quarter of 2013 to the first quarter of 2014.
“I am rather confident employment in businesses involved in growing and distributing marijuana will continue to grow at a higher than average rate for a while,” Hall said. Mainly because “retail marijuana is very new” and “employment will expand at a relatively fast rate until the supply of retail establishments and, therefore, jobs is enough to meet demand.”
Once there is a sort of “equilibrium” on that front, Hall expects the job growth rate to settle at a lower level and to be driven largely by population growth.
The MPP, which is the nation’s largest marijuana policy organization, has proposals in at least five states (Arizona, California, Maine, Massachusetts and Nevada) headed for the ballots in 2016 that would call for marijuana to be regulated like alcohol. The organization is also working to see such measures passed through the state legislatures in Rhode Island, Hawaii and Maryland, among others.
“The stage is now set for 2016, when measures to regulate marijuana like alcohol are expected to appear on ballots in at least five states,” Tvert said. “It is clear that marijuana prohibition has been a massive failure, and Americans are increasingly appearing ready to move on.”