Small Businesses Brace for Minimum Wage Hike

Started by National Acrobat, December 19, 2006, 11:39:58 AM

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National Acrobat

http://www.msnbc.msn.com/id/16229309/

It's indicative of what small business owners think and face when this happens. I work for a small business, I know it will impact us. I think the most important thing mentioned in the article is the trickle down that it will have on the rising of costs for goods and services, many of which we take for granted. Families like mine will have to make some choices as to what we will cut out when those costs start to rise. I don't dispute that people need a living wage, and I understand that.

What people don't seem to understand is that along with that, comes the costs associated with it so that small business owners (not mega corporations with deep pockets who won't notice this)  will continue to be able to survive financially.

90% of all businesses in the U.S. are small businesses and they are the backbone of the economy.

Celestial Goblin

Do you mean that small businesses will need to raise they prices? Or that they'll go bankrupt?
And I thought that small businesses weren't paying below the minimum wage?

National Acrobat

Quote from: Celestial Goblin on December 19, 2006, 01:33:54 PM
Do you mean that small businesses will need to raise they prices? Or that they'll go bankrupt?
And I thought that small businesses weren't paying below the minimum wage?

Most small businesses will

A-either have to raise prices for their services, or cut back on hiring (which is what we will be doing here, hiring less seasonal help during the busy times of the year)

B-Many small businesses currently start out their employee salaries right above the minimum wage, i.e. it's 5.25 now and a lot of places start employees at 6.00 an hour for example, but when it goes up to 6.85, they will start hiring people at the minimum wage, no longer offering starting salaries higher than the minimum wage, and even then, they will still have to raise prices and cut back on hiring.

The larger companies won't really notice much of a difference. The Wal-Marts and Krogers of the world will be able to afford to hire 1-2$ above the minimum wage as they currently can, due to the tremendous profits that they make.

Restaraunts are going to take the biggest hits. My sister-in-law is a waitress, and when the minimum wage goes up, her non-tip wages will go up almost 1.50 per hour, which means the restaraunt she works for will raise their prices to offset the increased salaries.

Elvi

I can only speak for this country and not others.

EVERY time there is an increase in minimum wage there is the same cry, "You'll put people out of business and out of work, you'll ruin the country, you'll kill off the small business man."

It always surprises me that, when the Government yet again says that it is time to give the lower paid workers a little extra in their pockets, it seems to be the same people shouting, "You'll put people out of business and out of work, you'll ruin the country, you'll kill off the small business man."
   
It's been fun, but Elvi has now left the building

RubySlippers

Well in Florida we have a higher than national minimum wage with a COLA adjustment annually and we also have one of the lowest unemployment rates in the country. There is no reason a higher minimum wage must equal losing jobs we in Florida have a bigger impact from hurricane insurance rates than ever would be impacted by this. This includes the restaurant industry. If we can do it here why not elsewhere?

Zakharra

Quote from: RubySlippers on December 19, 2006, 06:06:40 PM
Well in Florida we have a higher than national minimum wage with a COLA adjustment annually and we also have one of the lowest unemployment rates in the country. There is no reason a higher minimum wage must equal losing jobs we in Florida have a bigger impact from hurricane insurance rates than ever would be impacted by this. This includes the restaurant industry. If we can do it here why not elsewhere?

What are the prices of goods comparted to the rest of the nation?

RubySlippers

I personally didn't notice much of a change but remember here MOST jobs paid over the new minimum wage so there was a minimal impact. There is normal price increases and inflation so it would be hard to say. From personal experience it was generally speaking likely more affected by the hurrican insurance rates and property taxes far more than the minimum wage going up. The other two much more damaging than the minimum wage.

Zakharra

Quote from: RubySlippers on December 19, 2006, 08:38:04 PM
I personally didn't notice much of a change but remember here MOST jobs paid over the new minimum wage so there was a minimal impact. There is normal price increases and inflation so it would be hard to say. From personal experience it was generally speaking likely more affected by the hurrican insurance rates and property taxes far more than the minimum wage going up. The other two much more damaging than the minimum wage.

Yeah, that'd be a mitigating effect on any wage increase. If the fed was higher than the state, there would be amore of a noticeable effect. I know there wiull be one in my state. Most of the jobs where I live have been moving from mining/logging (Damn you enviromentalists! >:() to more service oriented jobs. Skiing, sports, tourism and the like.

A recent rise in home prices has also hurt the area too. Most home/land owners  are being forced to pay higher property taxes for homes that might have been worth $120k 4 years ago, but are now worth $250-400k on the market. That's caused a tax revolt.

RubySlippers

Well in Florida insurance is a much bigger factor and property taxes are based her on Best Use as in if a land lot can have condos on it the taxes are based on THAT value not what the property is actually being used for. A local hotel owner for example on a beach area has her taxes jump 400% in two years because the land COULD have a condo tower on it instead of a 24 unit apartment hotel. So which is a bigger impact here paying the maids a little more or that?

Not including her hurricane insurance by state law citizens the state insurer of last resort MUST charge more than the highest private insurer and as if they used a reinsurance company which they do not. Some businesses here are getting socked with 200-300% increases in insurance costs in some areas from them.

Zakharra

 Ouch. That has to hurt. Land taxes here are a bit different. They're assessed at current market value. The main problem is that most property owners are not wealthy and can't afford the newer tax rate. Also the schools were paid mostly thru land taxes, and with Federal,  state and local taxes added together, could be 35-50% of your pay each year. Depending on where the land was. And the schools were always wanting new levies added on properties. more and more.

Luckily we don't have hurricanes, floods or tornadoes.

National Acrobat

Quote from: Elvi on December 19, 2006, 04:50:15 PM
I can only speak for this country and not others.

EVERY time there is an increase in minimum wage there is the same cry, "You'll put people out of business and out of work, you'll ruin the country, you'll kill off the small business man."

It always surprises me that, when the Government yet again says that it is time to give the lower paid workers a little extra in their pockets, it seems to be the same people shouting, "You'll put people out of business and out of work, you'll ruin the country, you'll kill off the small business man."
   

I can only speak for the companies that I work for and my sister-in-law and sister work for, but in regards to these three cases, the raising of minimum wage will impact us, our work environment and the operations of our respective employers.

Not being political or philosophical or judgemental, just realistic.

Change will accompany it, and we'll have to deal. That's the way it is. In all three cases, the owners of our three businesses have already informed us of this, and have told us to expect it.

That's life.

There are pros and cons with the increase on both sides, and time will tell how it all pans out.

However, to think that nothing negative will come out of it is ignoring the obvious economic impacts, at least in the short term.