Last month, Democrats introduced the Raise the Wage Act in Congress to increase the national minimum wage to $15 by 2024. While this may sound like a positive on the surface, the reality is much more mixed. Employment Policies Institute is a nonprofit that recently launched it’s own anti-15-dollar-wage campaign entitled “Faces of $15”. The message behind the campaign is simple; $15 is too high and many small businesses will be negatively affected by it.
According to the Small Business Administration, small businesses provide 55% of all jobs and 66% of all net new jobs since the 1970s in the United States. 28 million small businesses account for 54% of all US sales. In addition, 600,000 franchise small businesses in the US are responsible 8 million jobs. Add to that the real estate component: small businesses in America are responsible for occupying an estimated 20 to 30 billion square feet of commercial space.
Most Americans can agree that the minimum wage needs to be increased. The issue is what that number looks like. While $15 isn’t the end of the world in terms of wage hikes, it is a number higher than most industries like manufacturing are ready to accommodate. The big reason is staying competitive on a global market. Foreign companies are able to create products at next to nothing and with rising expenses, keeping prices competitive is hard.
When minimum wage is considered most people think of the Walmarts or McDonalds and are confused at the issue this brings. The reality is that most affected are small businesses and most are operating month to month with low cash flows. With a lack of funding opportunities in today’s economy and rising wage costs, this could have a negative short term affect.
Minimum wages do need to raise, but I still believe $15 is too much for now.