Small Businesses and the Minimum Wage Debate

BY: ON MONDAY, SEPTEMBER 03, 2012

The issue of the federal minimum wage has been a quiet one over the past few years. While other hot-button topics such as healthcare and the overall dire state of the economy have superseded the minimum wage debate, it may again rear its head due to the upcoming election.

The hourly federal minimum wage has not risen since 2009 and currently sits at $7.25. The issue of raising the minimum wage has sparked debate amongst small businesses, who have historically been against it. The concept of raising wages conflicts with a number of small businesses that are currently fighting to stay in the black, unable to increase payrates because they simply cannot afford to do so.

It's often touted that an increase in the minimum wage stagnates employment. The fact of the matter remains, however, that an economic gap is forming amongst workers and is widening due to income inequality; such inequality is often tied to a relatively low minimum wage.

It's a sticky situation for small business owners. Yes, most bosses want to pay their employees a fair, competitive wage that will allow them to stick around and stay loyal to the company. In today's economy, however, that's easier said than done.

The minimum wage debate may seem dead and buried to some, remaining relatively untouched since 2009. With this year being an election year, however, this may very well change as Democrats hope to make the minimum wage part of their party's platform during this year's cycle. According to Thea Lea of the American Federation of Labor and Congress of Industrial Organizations, “The platform is all about building a strong economy from the middle class out, and the minimum wage is a key part of that. It's clearly something that's overdue. . . There will be mention of it in the platform this year.”

Opposition from the U.S. Chamber of Commerce, however, refers to a minimum wage increase as a “typical election year ploy.” Marc Freedman, the Chamber of Commerce's executive director of labor law policy, stated that “small businesses who would bear the brunt of this increase operate on very tight cash flows and would have to find more revenue from some source to cover these increases. These are the businesses on whom we are relying to turn around the economy, and arbitrarily increasing their labor costs is not a prescription for job growth.”

The debate continues to seem rather split; so what are the candidates saying as they continue to fight for the small business vote?

A minimum wage increase was included in the Democrats' 2008 party platform; however, the issue was hardly mentioned by President Obama since then. This seems rather apparent seeing as the minimum wage itself hasn't been touched since 2009. It could be argued that more pressing issues, such as healthcare reform, have been on the President's plate since his inauguration. Despite this, Obama did lay out a promise to raise the minimum wage to $9.50 by 2011. The reason for a lack of action could very well come down to opposition from SMBs.

Meanwhile, Mitt Romney has been somewhat back and forth on the issue of a minimum wage hike. In January, Romney stated that he supported a minimum wage increase, however, seemingly went back on his position months later starting on CNBC “There's probably not a need to raise the minimum wage.” In his recent plan to restore the economy, Mitt Romney has yet to specifically mention the minimum wage.

The minimum wage debate is a tough issue for small business owners and average Americans alike. Whether or not it enters the upcoming election as a hot-button issue remains to be seen, however, take this time to ask yourself; where do you stand on a minimum wage increase?

About the Author

Brent Barnhart
Brent Barnhart is a regular contributor to ChamberofCommerce.com. He covers a wide variety of topics through the written word, including content marketing, Internet marketing and small business trends. ChamberofCommerce.com is dedicated to helping small businesses grow their presence on the web and facilitates connectivity between local businesses and more than 7,000 Chambers of Commerce worldwide.
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