In recent years, the minimum wage on both a national and state level has become a hot topic for many businesses across the country, and one that has left a large number of entrepreneurs divided. Some believe it will help the economy, and therefore foster more growth for their companies, while others say that they can’t afford to pay workers more than they already do. Now, a new study seems to indicate that the former view has more basis.
Oregon is currently considering whether to raise the statewide minimum wage to $15 an hour, and data suggests that this might be a good idea for helping small businesses grow, according to a report from the Oregon Center for Public Policy. Between state and federal minimum wage increases, Oregon has experienced seven upticks since 1988, and each time there has followed strong economic growth in terms of both the number of small businesses, and the number of people employed by companies of that size. From that 1988 starting point until the start of the recent recession, the number of small businesses with fewer than 20 employees statewide increased more than 33 percent, and hiring followed suit.
How does it help?
Right now, some 589,000 people across the state are making less than the proposed minimum of $15 per hour, which would be implemented in phases that end in 2018, the report said. Over that time, the added value to those people alone in terms of their pay would amount to some $3.2 billion.
But that money has to come from somewhere, and that’s what owners are so concerned about, the report said. But two things are at issue here. First, the data suggests that businesses do better, not worse, and spring up at higher rates, when minimum wages rise; people have more money to spend, and they tend to spend it in their local areas. But second, there aren’t really that many small businesses paying their employees less than $15 per hour; that tends to be the provenance of bigger companies. In fact, fewer than 1 in 6 jobs in the state apply to small businesses which pay less than that number.
Owners who want to shore up their companies’ bottom lines in hopes of being able to afford these changes might want to think about ways in which they can find more reasonably priced small business insurance. Cutting costs for liability insurance, for instance, could free up thousands annually.