Minimum Wage Hikes Top-Of-Mind For Many Small Business Owners

Date: October 26, 2016

With Minimum Wage Increases Being Debated Nationwide, Employers Worry About Future Labor Costs

Minimum wages currently vary across the US, with some cities following the Federal mandate of $7.25, and others following state or local wage laws. However, nationwide the conversation about minimum wage increases has gained momentum in recent months ahead of November’s election. This leaves many small business owners wondering about the future of labor costs. NPR recently examined how the trend of rising minimum wages is troubling to many employers, who “say they’re not sure how they’re going to afford it.” Some employers are being forced to raise prices, but they fear it will cause them to lose customers. Economists say it is “hard to predict” how the gradual increase to $15 an hour in New York state and California will affect their economies because “past studies have not looked at increases this big and that affect this many people.”

While small business owners are expressing concerns about how to address rising labor costs, action on minimum wage laws continues across the US. NPR notes that Arizona, Colorado, Maine, and Washington State have ballot initiatives this Election Day to increase their state’s minimum wages. Meanwhile, the Chicago Tribune reports the Cook County Board of Commissioners is “expected to pass an ordinance” to “gradually raise the minimum wage to $13 by July 2020, following its approval by the board’s legislative and intergovernmental affairs committee.” The first increase from $8.25 to $10 an hour would take affect July 1, 2017, followed by $1 raises each July through 2020. The Des Moines (IA) Register reports Iowa Gov. Terry Branstad (R) has said his administration will explore a statewide minimum wage increase. And, Politico reports that a Federal judge in Alabama is hearing a case this week that challenges “as unconstitutional a state law that nullified Birmingham’s minimum wage increase.” There has been some pushback on these wage increases, as seen in Kentucky, where in a 6-1 decision, Kentucky’s Supreme Court struck down a minimum wage increase that had been approved by the Louisville Metro Council, the AP reported. The court said the council’s ordinance – approved nearly two years ago to increase worker wages to $9 per hour – was “invalid and unenforceable.”

What This Means For Small Businesses

Small business owners are disproportionately affected by rising labor costs as minimum wages increase. However, with the issue gaining momentum, it’s likely that minimum wage increases will continue to be a hotly-contested issue in the coming months.

Additional Reading

Reuters also covers the Louisville minimum wage case.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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