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The minimum wage directly affects small businesses because a large amount of their earnings go directly to pay for operating expenses, such as equipment, supplies, lease or mortgage, credit lines, inventory and employee wages and benefits

  • Small businesses are the least able to absorb such a dramatic increase in their labor costs
  • Big corporations do not have to absorb the cost of minimum wage increases because most minimum-wage jobs are offered by small businesses 
  • The small-business sector has historically created two-thirds of net new private jobs in the U.S. economy. But it has failed to recover in recent years because of a series of policies that increase the burden on small-business owners—higher taxes, increases to health-care costs, more costly regulations, and now the minimum wage increase proposal

Mandatory wage increases hurt not only small businesses, but their employees as well

  • Raising the minimum denies more low-skilled workers the opportunity to get a job and receive “on the job” training
  • Workers must bring at least as much value to the firm as they are paid or the firm will fail and all jobs will be lost. Raising the minimum wage raises the hurdle a worker must cross to justify being hired
  • A higher minimum wage would force employers to stop expanding or to downsize. It will have a direct impact on unemployment rates

The economics of a manufactured wage increase

  • Economist continue to affirm the job-killing nature of mandatory wage increases:
  • Mandatory minimum-wage increases end up reducing employment levels for those people with the lowest skills
    • Employees between 16-24 years old account for 50 percent of all minimum wage earners.[1]
    • The retail and leisure/hospitality industries account for 68 percent of all minimum wage jobs, many of which tipped positions.

About 5 percent of all hourly paid employees earn at or below


[1] Department of Labor, U.S. Bureau of Labor Statistics, Current Population Survey, “Characteristics of Minimum Wage Workers: 2011”. http://data.bls.gov/cgi-bin/print.pl/cps/minwage2011tbls.htm

 

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