Increasing the Minimum Wage: Pros and Cons for Small Business

Since the late 1930s, the Federal government has recognized the need for a national wage floor: a minimum wage level below which Congress will not allow wage offers to fall.  The critical impact of an increase in the minimum wage centers on employment and viability of small businesses.

Does the minimum wage and any proposed increases hurt small businesses? There has been exhaustive research and debate on this topic; and yet, American economists are split on their opinions.  While there may be no consensus between economists about the effects of minimum wages on employment, there is no shortage of debate and controversy around the topic.
Opponents argue that increases reduce the number of jobs available and contend that small businesses will be forced to cut staff hours or raise prices to noncompetitive levels. Jobs will be lost. For some, doors will permanently close. Neighborhoods will change.

Proponents of an increase site research of states with higher minimum wages and reported increase in employment, particularly amongst typical low-wage jobs such as food service industry and retail.

While all small business owners remain concerned about the impact a higher minimum wage will have on their profit margins, most are taking a "wait and see" approach and will evaluate other cost cutting measures to maintain profitability. 

Small business owners may be more willing to abide by the increased minimum wage since many already pay their employees above the federal minimum in an effort to build and maintain employee retention. As a small business owner, you have likely focused on hiring quality employees who you plan on keeping around for an extended amount of time, and offering higher pay, above minimum wage can make working for your company more appealing.


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