As small business owners cheer President Joe Biden’s plans to provide more aid to a pandemic-ridden high street, they also discuss another of his pledges – to raise the federal minimum wage to $ 15 an hour.
Workers’ rights groups are cheering the move, but proponents from America’s smallest companies warn that such a surge could prevent an already challenging economic recovery on the way back to stability after the health crisis.
Biden’s plans would more than double the current federal minimum wage of $ 7.25 an hour, which has not changed since 2009, despite repeated efforts by Democrats to raise wages for low-wage workers.
A 2019 report by the Congressional Budget Office predicted that gradually increasing the federal minimum wage to $ 15 an hour by 2025 would raise wages for 17 million workers, but could also cost 1.3 million workers their jobs. In addition, 1.3 million people would be lifted above the poverty line. While the federal minimum wage has stagnated for more than a decade, more than half of the state’s states have above-federal minimum wages, and the pressure of $ 15 builds up in states and communities as local government takes action.
“We cannot and will not return to the status quo after the end of the pandemic because the status quo is not working for us,” union member Rita Blalock said in a press release from advocacy group Fight for $ 15. The group went on strike earlier this month to seek higher wages in the fast food industry and continued its year-long efforts to expand workers’ protection and pay.
The economic recovery for small businesses will be an ongoing challenge even if stimulus measures are implemented to increase consumer spending. Researchers at Opportunity Insights estimate that the number of small businesses in America fell by nearly 30% in the past year.
A number of industry groups have raised concerns. The National Restaurant Association said Biden’s move could “do more harm than good” for the entire industry. The International Franchise Association also warned the increase could be counterproductive at this point. Matt Haller, IFA’s senior vice president of government relations, said, “A request to more than double the wages of some workers will hurt companies in trouble and likely slow recovery.” “”
The advocacy group of the National Federation of Independent Business reiterated this assessment, saying that small businesses are being disproportionately harmed.
“We are concerned that elements of this plan could harm the companies that have carried the lion’s share of the pain from the pandemic,” Kevin Kuhlman, NFIB vice president of federal relations, said in a statement. “Large corporations may be fine with dramatic increases in the minimum wage and federal paid vacation mandates since they were successful during the pandemic, but small businesses know these guidelines will make it even harder for them to hold their own against their bigger competitors. “
An example of this is Target, which would spend $ 200 million on Monday to give its employees another round of rewards. The discounter accelerated plans to raise its starting wage to $ 15 an hour in July.
Small business owners like Patrick Guay are exploring what the hike could mean if it breaks legislative hurdles and becomes a reality. Guay owns four Mooyah restaurants in Massachusetts and Connecticut, where minimum wages are $ 13.50 and $ 12, respectively. It usually starts younger workers at the minimum wage and pays higher wages to older workers with more experience who may support families. When the federal minimum hits $ 15, he’ll have to adjust pay across the board accordingly.
“Every year when the minimum wage increases, you also need to reevaluate your existing employees to differentiate their wages. It is a big problem that you have hourly employees who earn almost the same as your employed directors.” in the restaurants, “said Guay.” I’m not sure it’s fair to burden the small business owner with everything and then make the decision about how much of that we want to pass on to our customers. “
While small business owners may voice concerns about higher wages, the vast majority of Americans, about 72%, support the idea of raising the minimum wage. This is the result of an Ipsos survey of 1,114 adults carried out on behalf of Public Agenda and USA Today in August. Some proponents say that increasing workers ‘wages will mean more money in workers’ pockets, which could benefit small businesses and the economy as a whole.
The small business owner Julia Knight pays a higher than the minimum wage at her company of the same name, Julia Knight Collection, in Minneapolis. She has three employees and more than a dozen contractors, and says she never pays less than $ 20 an hour because the expertise she needs requires higher wages. Your employees also have health insurance. This is true even if their business that sells high-end tableware has suffered a blow due to the pandemic and economic recession.
“I just don’t like it when the people who work for me worry about how they’re going to take care of themselves,” Knight said.
She added that those who say $ 15 an hour is too high would say, “Have you looked those people in the eyes and said, ‘You have to raise a family at $ 15 an hour’? I don’t see , how it works. “
– CNBC’s Betsy Spring contributed to this report.