Small Business Calls Minimum Wage Mandate "Bad Economics"

Date: February 17, 2020

Increasing Minimum Wage Would Reduce Pay, Hours, and Benefits at Wisconsin Small Businesses

NFIB is strongly opposed to a proposal that would increase the state’s minimum wage to $15 per hour.

“Raising the minimum wage is more about the politics of the moment than about the realities of the economy,” said NFIB’s state director in Wisconsin Bill G. Smith. “A government mandate that increases the wage rate for entry level workers may score political points, but it will have a serious negative impact on the ability of our small member employers to provide meaningful job opportunities for a vital share of our workforce.” 

Small business would feel the brunt of this legislation.  When employers face government mandated increases in wages, they face tough choices.  They must increase the cost of their products or services or reduce labor costs. The reduction in labor costs would be achieved through reduced jobs and hours, or reduced benefits. None of these changes benefit employees. NFIB opposes raising the minimum wage because 92% of NFIB members are against this mandate.

In New York City, a study by The Hospitality Alliance found 75% of the more than 300 respondents reported they will reduce employee hours as a result of the minimum wage hike to $15 per hour, while 47% said they will eliminate jobs. The NFIB Research Center found that the negative impact of a $15 minimum wage would disproportionately fall on small employers, which are less likely to have the cash reserves or profit margins to absorb the increase in labor costs than larger businesses. The same study found that the retail, food service, and administrative support industries would lose the most jobs.

“When all is said and done,“ said Smith “raising the minimum wage actually puts very little disposable income into workers’ pockets. To the contrary for those who are the victims of fewer hours or lost job opportunities. Those workers will actually earn less.”

Smith urged legislators who are serious about improving the lives of working families to focus more on creating an environment where small businesses can grow and create good paying jobs, rather than imposing a job killing mandate that would force small business to stop expanding or even downsize.

Related Content: Small Business News | Wisconsin

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