There has been a lot of talk in recent months about the ways in which the federal government might increase the national minimum wage as a means of helping many struggling workers make ends meet. However, this issue seems to be a point of concern for many small business owners across the country, who think that such a change might end up eating into the already thin margins on which they currently operate.
In general, many entrepreneurs believe that by raising the federal minimum wage by as much as a few dollars an hour – to $10.10 by 2016 – could end up having a big negative impact not only on small businesses in general, but also on their ability to employ as many workers as they currently do, according to a report from Lansing, Mich., television station WLNS. Many small business owners are concerned about the fallout simply because it raises their costs without giving them much in the way of a return. Many further worry that if they have to start paying $10.10 per hour to minimum-wage workers, then the employees they have who currently make about that same amount will likewise want a raise.
“Somebody thinks there’s some magical profit pool out there that’s unlimited, it’s not,” Mike Wylie, assistant manager at The Student Book Store in Lancing, told the station. “A business might raise their prices 3 or 4 percent, but that’s not going to counter a 35 percent increase in payroll.”
On the other hand
Of course, experts also note that in general it’s believed that an increase in consumer pay leads to an increase in spending, particularly in workers’ local areas, the report said. That is, workers struggling under the current minimum wage will not put every dollar they earn above that level into savings or spend it with major national corporations. As such, that could actually end up boosting sales for many small businesses, which may be particularly worried about the added costs associated with the issue.
Owners worried about the state of their bottom lines when the minimum wage finally does rise might want to look into other ways in which they can save money over time. That could include shopping around for more affordable small business insurance policies, such as those for commercial insurance, as doing so could end up saving them thousands of dollars per year.