In his State of the Union address last week, President Obama proposed raising the federal minimum wage from $7.25 per hour to $9.00 an hour by 2015. It has gone up 14 times since 1970. Reaction was mixed from small business owners as they recover from the Great Recession.
The Chicago Tribune reports that some see it as a way to give employees more flexibility to spend, which can grow their businesses. Other small-business owners say it will force them to hire less people and hamper the growth of their company as the economy is struggling to recover.The dialogue on this issue for small business is meaningless and has no real effect on small business because:
- The current minimum wage is actually a third of the average hourly rate American workers earn of almost $20. Except for retail service-based companies, most people that work for small businesses make a lot more than minimum wage.
- The use of freelance resources are highly utilized by small businesses so they do not need to hire employees. The rate of a freelancer is not regulated.
- The rate that is paid to an employee is only one factor in the total cost of that person. For example, the cost of health care will kick in for larger small businesses in 2014.
- With crowdsourcing platforms like Guru.com and Elance.com, the free market economy decides the value the small business owner will pay for a resource. There are no longer geographic barriers.
- Forty percent of the states (including the District of Columbia) already have a minimum wage above $7.25. Ten states just boosted their rates last month.
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How do you think raising the minimum wage will affect your business?