The issue of the minimum wage increase is a divisive one. The latest national survey from SCORE and OnDeck highlights this very point. The data shows it is almost a statistical tie, with support for an increase only four percent higher than against (43% to 39% respectively).
Minimum Wage Increase Statistics
However, a clear majority (73%) of small businesses agree the minimum wage workers receive in their state is not a “living wage.” So, there seems to be an agreement when it comes to the amount employees need to live.
But the problem seems to be in the implementation of the higher wages. Because more than half of businesses already pay their staff more than the minimum wage. SCORE CEO Bridget Weston, explains this dilemma in the release for the report.
Weston says, “For the majority of small business owners, the question is not whether the minimum wage is appropriate at a state level; rather, it’s how they will respond to an increase, whether that means adjusting other employees’ wages proportionately or investing differently in their business.”
Is Minimum Wage Supposed to be a Living Wage?
One of the biggest challenges to making minimum wage a living wage is most businesses think it wasn’t intended to provide for a family. The wage is, in most cases, for entry-level jobs. This includes high school students or tasks without additional skills or training.
Furthermore, businesses also say there should be a tier of minimum wage for different types of labor. Businesses in this camp say seasonal and permanent workers should get different salaries.
It is important to realize this report shows small business owners want to do right by their employees (for the most part). The vast majority want to pay them a fair/living wage while ensuring their business doesn’t go under.
What are Small Business Owners Saying?
According to the survey’s minimum wage increase statistics, small business owners are split regarding the minimum wage in their state. Again, an almost equal number of the respondents are on opposing sides. While 44% say it is too low another 40% say it is about right. On the other hand, there are 16% of owners who believe it is too high.
The problem is most owners believe an increase will significantly impact their small business. In fact, 55% believe a higher minimum wage will hurt their business. In contrast, 16% believe an increase would positively affect their business.
These conflicting data points highlight the dynamic nature of the small business segment. When you take into consideration small businesses represent more than 99.9% of all businesses in the U.S. employing 59.9 million people, there is bound to be contradictions.
The Impact on Small Business
In the report, 44% of owners say a higher minimum wage will eventually result in cutback to investment in their business. For 10% fewer of the respondents or 33%, they say they will not have to cut back as a result of a higher wage. Again, the contradiction persists.
But if they have to raise the minimum wage, 37% said they will also raise other employee wages proportionately. An almost equal number or 34% say they won’t, and another 30% aren’t sure.
So what percentage of the employees of these small business owners get a minimum wage salary? For 58% of the owners, the answer is zero, which means they are paying them more than the minimum wage.
Almost one in five or 19% say 1-25% of their workforce get minimum wage. This is followed by 5% paying 25-50% of their workforce, 4% paying 51-75% of their workforce and 14% paying more than 75% of their workforce a minimum wage.
Take a look at the SCORE infographic below for all the survey results.
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You can’t really talk about minimum wage at a national level. Wages should be set based on the local cost of living and that varies dramatically. It’s also important to factor in the local employee pool. Areas with higher unemployment will naturally have lower wages and areas with low unemployment, and therefore more competition for workers, will tend toward higher wages. Once you’ve considered these factors you can have a better discussion about where a minimum wage should be set.