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Small Business Divided Over Minimum Wage Hike

Small Business Divided Over Minimum Wage Hike

By | 02.28.13
Small Business Divided Over Minimum Wage Hike

Traditionally, most small business owners have opposed increases in the federal minimum wage.  But  support among small businesses for President Obama’s recent proposal to raise the minimum wage from $7.25 to $9 an hour by the end of 2015 may be growing.

When the issue of increasing the federal minimum wage has been raised in the past, small business lobbyists have argued that such a move would force employers to fire workers.  Now, groups composed entirely or primarily of small business owners–such as the Main Street Alliance, Greater New York Chamber of Commerce, and the National Latino Farmers & Ranchers Trade Association–are considering new research that suggests a wage increase wouldn’t necessarily hurt employment.

Adjusted for inflation, the minimum wage today provides less of a living wage than the minimum of $1.60 an hour in 1968 did.  “It’s just really ridiculous to think that business owners can’t pay today at least as much as what they paid four decades ago,” says Business for a Fair Minimum Wage founder Holly Sklar.  “If the customer base is undermined because wages are so low, they [small businesses] feel it directly.”

Margot Dorfman is chief executive officer of the U.S. Women’s Chamber of Commerce, a 500,000-member organization consisting mostly of small business owners. Dorfman believes that business owners “…who pay a living wage have an advantage over their larger counterparts who don’t.”  Even for those who support a wage hike, however, timing is a concern.  “Whether Obama’s proposal is high enough or the time frame is fast enough is the question,” says Dorfman.

Not all small business groups are convinced that wage increases benefit Main Street.  Most notably, the National Federation of Independent Business and the National Small Business Association oppose the president’s proposal.  “If you artificially increase demand in the form of minimum wages, you’re going to suppress demand elsewhere, and that’s going to come directly from the employer’s side,” says NFIB spokesman Jack Mozloom.

NSBA president Todd McCracken says that a federal increase would only affect “…a relatively small part of the business community.”  Both he and those who support an increase note that most small businesses already pay employees more than the federal minimum in order to compete with larger companies for qualified workers.  Still, McCracken says “I think this is being proposed primarily because the politics work for the president here.”

Source:

Klein, Karen E. “Higher Minimum Wage? Small Business Doesn’t Mind.” Bloomberg Businessweek, 2/21/13.

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