South Dakota Small Business: Proposed Mandated Wage Increase Would be Devastating

Date: February 24, 2021

South Dakota NFIB Member: $15 Minimum Wage Would Send Me Out of Business

South Dakota small business owners, along with NFIB, the National Federation of Independent Business in South Dakota, are warning lawmakers in South Dakota and those that serve South Dakotans in D.C. of the devastating impacts to small business owners from an increase to a $15 minimum wage here in South Dakota. A recent NIFB survey finds that of those employers who would be negatively impacted from the $15 minimum wage increase, 89% reported they would experience lower earnings, and 87% said they would increase prices. The full findings are listed below.

Ruth Hiles runs Almar Inc, a tax prepping and bookkeeping business in Huron. Hiles says that if the $15 per hour wage passes, she will price herself out of business.

“As a small business owner, I would have to raise my prices to cover the additional payroll costs. I have one full time and one part time hourly employee. I can justify paying a higher wage for my full-time employee; however, my part time employee holds a fraction of the responsibilities.  A $15 per hour minimum wage is beyond unreasonable for most small business owners. In South Dakota, we have the luxury of a lower cost of living and lower taxes than some more densely populated areas. This is unrealistic for our area!  If Congress tells our business to raise wages, will they also tell us where those extra funds will come from? Due to the pandemic and government-mandated business closures and restrictions, our small business has struggled to stay in business. Passing on higher costs may put us out of business, which would ultimately hurt the employees Congress is aiming to help,” says Ruth Hiles.

“Small businesses owners here in South Dakota are grateful for what Congress has passed so far: the Paycheck Protection Program, which has been very helpful to keeping their doors open and employees on their payroll although there’s still a big concern at the top of their minds,” said Lindsey Riter-Rapp, NFIB State Director in South Dakota. “The threat of a $15 minimum wage would be devastating to 75% of our small business owners here in South Dakota. Nearly 90% of small business owners say they would have to increase their prices if this bad legislation passes which in turn, is passed on to the consumer. It’s a lose-lose situation.”

Key findings from the survey include: 

As increasing the federal minimum wage is being debated, most small business owners already pay above the current minimum wage.

  • Four out of five small employers have no full-time or part-time employees who are currently paid the minimum wage or less.

Increasing the federal minimum wage not only increases the wages of those positions that fall under $15 per hour, but often increases many of the wages for those positions above $15 per hour.

  • About two-thirds of small employers pay one or more of their employees less than $15 per hour.
  • Of all small business employers, 19% would have to raise wages for all of their employees earning just above $15 and 22% would have to raise wages for most of their employees.
  • Another one-in-four report they would have to raise wages for all their employees.

An increase in the federal minimum wage to $15 per hour over five years would negatively impact almost three-fourths of all small employers.

  • Seventy-four percent of small employers report that this proposal would negatively impact their business.

Of those employers who would be negatively impacted, 89% report that they would experience lower earnings and 87% report that they would increase prices.

  • Fifty-eight percent report that they would reduce their number of employees, 60% report they would reduce employees’ hours, 67% report they would leave open positions unfilled, and 56% would increase the use of less expensive or part-time employees.

This publication marks NFIB’s 15th Small Business COVID-19 survey assessing the health crisis impact on small business operations, economic conditions, and utilization of the targeted small business loan programs. The first series was published in early March 2020 with subsequent publications every 2-4 weeks, found here.

This publication marks NFIB’s 15th Small Business COVID-19 survey assessing the health crisis impact on small business operations, economic conditions, and utilization of the targeted small business loan programs. The first series was published in early March 2020 with subsequent publications every 2-4 weeks, found here.

 

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