Minimum wage debate pits small business owners against small business owners


On the minimum wage issue, there’s plenty of passion but not much consensus among the nation’s small business owners. (Carolyn Kaster/AP)

Small business owners are vehemently opposed to raising the minimum wage.

Meanwhile, in other news, small business owners overwhelmingly favor raising the minimum wage.

Wait. What?

Depending on who you ask and which polls you trust, you can come away with a very different perspective on how an increase in the federal minimum wage would affect small firms. And with Congress and several states currently mulling legislation to raise the floor on wages, employers in towns across the country are lining up on either side of what has become a critical election-year issue in Washington.

On one side, the National Small Business Association and National Federation of Independent Business continue to push back against raising the minimum. They have long argued that requiring employers to pay workers more will force many of them to either cut back on hours, put off hiring, or lay off employees in order to keep their labor costs down.

“Raising the minimum wage will kill jobs and stifle economic output,” NFIB Manager of Legislative Affairs Ashley Fingarson said earlier this week, as the organization sent a letter to the Senate urging lawmakers to vote against a bill that would raise the minimum hourly rate from $7.25 an hour to $10.10 an hour (Senate Republicans blocked the legislation from moving forward on Wednesday).

There’s no shortage of small business owners who have echoed Fingarson’s concerns. Dolores Riley, who owns a daycare center in New Jersey, says a recent bump in the state’s minimum wage to $8.25 an hour will add up to $15,000 to her costs this year.

In Seattle, where the city is looking at lifting the hourly minimum as high as $15, Robin Bartlett-Smith, who owns a musical instrument store, says money is already tight, arguing that lifting the wage floor will “hurt just the small businesses,” not the large corporations that can more easily absorb added costs.

Mike Beckett, owner of a bookstore in New Mexico, says that he was forced to let several workers go when the federal minimum was last raised in 2007. He says the change “was crippling for” his small company, and if it increases again, he may find himself in the same position, trying to determine which workers to terminate.

But what if book sales ticked up in Beckett’s store, and what if more people started buying guitars from Bartlett-Smith? Would the added revenue outweigh their higher labor costs? Could Beckett bring back some of those workers, and perhaps hire more?

That’s the most common line of reasoning on the opposite side of the debate. Small employers in favor of raising the minimum wage argue that individuals making $7.25 an hour simply don’t have enough money to purchase their company’s goods or services.

Increase the minimum wage, they say, and you’ll increase sales.

“The only way a business is going to survive is if people have money to spend, and if people have money to spend, they will buy your product,” Barb Johnson, who owns a small cafe in Minnesota, said in an interview earlier this year with the University of Minnesota.

“I’m not losing money by paying one or two people higher wages if I’m busy enough,” she added. “And I would be busier if more people had more money.”

John Shepley is one of the owners of a Maryland business that grow plants for eco-friendly roofs. His state last month became the second state to embrace the president’s calls for a $10.10 minimum wage, says he favors the wage hike. He noted that low-wage workers usually turn right around spend nearly all of their earnings, often at local businesses.

“That added spending, added tax base, and all the other benefits are going to far outweigh any conceivable downsides,” he said at an event with the Department of Labor.

Some owners say paying higher minimum wage helps businesses retain employees and cultivate a more reliable workforce, as well.

“We hired entry-level people at near minimum wage in the past, and learned this resulted in their personal financial problems impacting the quality of the work they produced,” Carmen Ortiz Larsen, a small business owner in Maryland and vice president of the Hispanic Chamber of Commerce in Montgomery County, said in a statement earlier this month in support of a higher wage floor in the state.

Her consulting company now pays no lower than $10 an hour, translating into “good retention rates, a good product and happier customers.”

During a rally at the Capitol earlier this month, Scott Nash, co-owner of Moms Organics Markets in the Washington region, offered a similar take. He said his company has found that “people with less stress are happier and work more productively,” adding that “the minimum wage right now is too much of a burden on these workers.”

National small business advocacy groups like Small Business Majority, the Main Street Alliance and Business for a Fair Minimum Wage are pushing those owners’ messages in Washington. The latter has gathered more than a thousand signatures from employers in favor of bills that would raise the minimum wage, while Small Business Majority recently published a poll showing overwhelming support for the legislation.

Other polls show a more even split on Main Street. A Gallup poll shows that 50 percent of small business owners would not approve of raising the national minimum wage, barely more than the 47 percent in favor of a hike (3 percent did not respond or were indifferent). About a quarter say they would likely shrink their workforce if the minimum was increased.

A similar survey by CNNMoney and Manta found that 44 percent of small employers support a $10.10-per-hour minimum wage, while 49 percent oppose the increase. In addition, researchers found that the smallest of small businesses (0 to 9 workers) are most commonly in favor of a wage hike, while larger companies (10 to 99 workers) want the minimum wage to remain at its current level.

Follow J.D. Harrison and On Small Business on Twitter.

J.D. Harrison covers startups, small business and entrepreneurship, with a focus on public policy, and he manages the Post's On Small Business blog.
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