Across the country, many small businesses operate on extremely thin margins and as such have to be very careful about their expenditures overall. Consequently, the recent talk about raising the federal minimum wage to $10.10 has many concerned about what such a decision would have on their bottom lines.
The federal minimum wage level is set at just $7.25 per hour, though many states have theirs higher than that level, but President Barack Obama said in his State of the Union address earlier this week that he'd like to see that number raised to $10.10, an increase of more than a third, according to a report from Booth Newspapers. Nationwide, 13 states have already taken efforts to raise their minimum wages for 2014, with Washington posting the largest such increase; lawmakers there set the state's minimum to $9.32.
However, those small business owners who are concerned about the ways in such changes will impact them seem to be relatively few and far between, the report said. A recent survey from the industry ground Small Business Majority shows that about two in every three such entrepreneurs actually support boosting the minimum wage.
A stark change
The reason that there's so much talk about raising the minimum wage these days is because critics point out that $7.50 per hour is not a living wage in almost every part of the country, the report said. Further, the current levels – in terms of the value of a dollar – are actually below historical levels; the all-time high in purchasing power of the minimum wage came in 1968, when federal lawmakers boosted it to $1.60 an hour, worth $10.71 in today's money when adjusted for inflation and other factors. Today, though, owners say the concern comes not as a result of what they'll have to pay their lowest-level workers, but rather what those above that level will expect in commensurate raises.
"If you're paying a dishwasher $10 an hour, then cooks and other staff, who might have a higher skill set, are going to expect a similar increase," Daniel Pratt, chef and kitchen manager at Hard Knock Grill, told the newspaper. "We might have four or five (kitchen) people working at a time, plus myself. A $3 increase (per hour) a person would be a drastic, drastic change."
Owners worried about such costs will likely need to look inward to make sure they can afford the increase when it comes. That could include finding more affordable small business insurance, such as liability insurance.