Minimum Wage Hike Debate: Small Business Owners Are Split
By Hal M. Bundrick for MainStreet
NEW YORK (MainStreet) Small business owners are feeling more optimistic, but not enough to support a raise in the national minimum wage. The most recent Wells Fargo Small Business Index stands at a positive 24, compared with the third quarter index score of positive 25. While that's the second highest score in the last five years, it is still below pre-recession levels.
Small business owners were asked if they favored a hike in the minimum wage to $9.50 an hour and the results were split: 47% said the approved, while 50% disapproved. The results are quite different when the question is fielded to the general public. Three-fourths of Americans said they supported increasing the minimum wage from the current $7.25 to $9.
A majority (60%) of small business owners said increasing the minimum wage would hurt their business. Still, if the minimum wage hike was made law, nearly 60% of the entrepreneurs admitted they would not reduce their current workforce or employee benefits.
The survey results follow recent state and federal government legislation and proposals on the minimum wage, including the recent passage of a new law in New Jersey that indexes future increases in the minimum wage to inflation. In September, the California state legislature voted to raise the state minimum wage to $10 an hour by 2016. A proposal to raise the minimum wage has also been floated in the U.S. Senate.
When business owners were asked to pinpoint the most important challenge they currently face, "finding new business" was the leading concern, garnering 13% of responses. Other top challenges include the economy (12%), healthcare (11%) and government (11%). The number of business owners identifying "government" as the most important challenge was much higher this quarter than in the third quarter.
"Small business owners are still in wait-and-see mode," said Doug Case, Wells Fargo small business segment manager. "As they plan for next year, they are looking for more economic stability. Yet the debates around the debt ceiling and Federal budget signal more uncertainty ahead. And uncertainty suppresses business growth and expansion."
The survey also found that nearly one in four small business owners expect to have a better operating environment and are more optimistic about their business's future in 2014. But half of those surveyed said they believe the operating environment next year will be about the same as this year.
--Written by Hal M. Bundrick for MainStreet