Minimum Wage Hike Proposal Debate
Editor's Note: The following story is courtesy of CNBC.
The fight over an increase to the minimum-wage, which many small businesses pay their employees, has already begun in Congress. And small employers on both sides of the issue — armed with plenty of Tweets, videos, press releases and data — have entered the fray.
President Barack Obama has proposed raising the federal minimum wage to $9 from the current $7.25 per hour. The current level equals an annual income of about $15,000. The last minimum-wage increase to $7.25 was in July 2009.
Plenty of Detractors …
The National Federation of Independent Business, which represents smaller employers and independent businesses, recently released an online video that highlights why raising the minimum wage is bad for small business and the bottom line. It was posted on YouTube last week and Tweeted.
On the video, NFIB's Chief Economist Bill Dunkelberg dismisses the often-used argument that raising the minimum wage fuels growth by giving low-income workers more money to spend in the economy, and lifts them out of poverty.
"Every dollar in minimum wage a worker receives comes out of the pockets of consumers in the community, so there is no overall increase in spending power as supporters have lead," Dunkelberg says.
Dunkelberg notes raising the minimum wage is a bad for business because the increase doesn't help the poor, most of whom aren't working; costs jobs; cuts job opportunities for the young; raises the price of goods produced with a lot of labor services; and reduces the purchasing power of consumers, when owners raise prices to cover increased costs.
And Backers, Too
But backers of a higher minimum wage have been busy too, cobbling together press releases — complete with names, locations and comments from small-business owners. High-profile CEOs of publicly-traded companies such asCostco and Starbucks have also stepped into the minimum-wage debate.
"The minimum-wage issue is a double-edged sword," Howard Schultz, chief executive of the coffee giant, told CNBC last week.
"On balance, I am a supporter of the minimum wage going up," Schultz said. "We've got to be very, very careful and be careful what we wish for because some employers — and there could be a lot of them — will be scared away from hiring new people or creating incremental hours for part-time people as a result of that wage going up."
Other supporters include the Business for a Fair Minimum Wage, a network of business owners and executives. Backers of a higher minimum wage point tostudies that have found an increase in minimum wages did not result in job cuts.
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