While a number of polls in recent months have shown that President Barack Obama’s proposed increase for the minimum wage, to be implemented in stages over the coming years, has broad support among the majority of small business owners, there are still many difficulties tied to such a change. For example, a large number of companies now say they will have to lay off at least some of their employees if this move takes effect.
Today, 38 percent of employers say that an increase in the minimum wage to the proposed $10.10 per hour would force them to shed some workers as a means of making their bottom lines work for the future health of their companies, according to a new survey from Express Employment Professionals. Along similar lines, 54 percent of owners polled said that their companies would have to scale back hiring efforts in the future, and 65 percent said they will have to raise prices.
“There’s been a lot of debate and speculation about the impact of a minimum wage increase on job creation,” said Bob Funk, chief executive officer of Express. “As with any such policy change, there are upsides and downsides. But based on this survey, there’s no denying that raising the minimum wage will result in layoffs, reduced hiring, and higher prices at a large chunk of American companies. How severe will those effects be? That remains to be seen, but policymakers will certainly want to be mindful of this reality as they legislate.”
Impact would not be uniform
However, it should be noted that this effect would likely be less significant for companies that already pay their workers more than the minimum wage, the report said. Of that group, only 19 percent say that an increase in the minimum wage would require them to lay off workers, while just 39 percent would reduce future hiring and 51 percent would have to boost prices.
Owners who are so worried about their bottom lines that they might have to let some workers go may instead benefit themselves, their employees, and their companies by first reducing their expenses in other ways. For instance, taking the time to shop around for more affordable small business insurance policies, including those for errors and omissions insurance, might end up saving them thousands of dollars per year that could then be devoted to boosting worker compensation.