In a movement to substantially increase the floor pay for workers, The City Council of Seattle voted in 2014 to raise its local minimum wage from $9.47 to $13 per hour in 2016 with the goal of eventually making it the landmark $15 figure by 2021.
Meanwhile, in cities throughout America – from New York and Washington DC to Los Angeles and San Francisco – there is a plan in place to put a $15 minimum into effect in the coming years. Meanwhile, California has phased in statewide law.
In a USA Today Op-Ed, Seattle Mayor Ed Murray, wrote: “While not a silver bullet to address inequality, the minimum wage is a critical tool benefiting low-wage workers and our economy. Putting more money in workers’ pockets leads to more spending at local businesses, growing our economy.”
However, not everyone supports the $15 minimum wage law.
In fact, a new study conducted by researchers at the University of Washington reveals that the wage hike may actually be hurting the workers it intends to support. Researchers cite that when wages increased to $13 an hour, low-wage workers saw their hours drop by 9% and ultimately made less than $125 each month, on average.
Here are three reasons why a $15 national minimum wage is bad for small business in 2017:
1. Negative Impact on Hiring and Employment
One of the most obvious disadvantages of the campaign for a national $15 minimum wage is the impact that it would have on hiring. Employers typically allocate a budget for such expenses, and while there may be some flexibility, there is a limit to what they can pay. If the increases to the minimum wage rate causes the budget to exceed that limit, expect the employer to act accordingly. That may result in less hours for each worker, or the elimination of positions entirely.
2. It is Anti-American Dream
Minimum wage jobs are not intended to be careers. A vast majority of these positions that pay low salaries fit the bill of low-skilled workers. They are perfect for a high school or college student seeking experience while earning paycheck. These types of jobs build character that can be applied at later stages of careers.
Rewarding workers with salaries that are more than twice the federal minimum wage sends the wrong message to those who dedicate time and money to learn and master a skilled craft, regardless of industry. After all, the American Dream was built on hard work and ambition.
3. It Wouldn’t Work Everywhere
It is true that certain geographic areas are more affluent than others alas the varying minimum wage rates. However, imposing a mandatory $15 minimum wage would be a death sentence for some business owners as it ignores the current cost structures already in place.
For instance, what employers in the rural Midwest can afford to pay workers differs vastly from what companies in New York or Silicon Valley can pay.
Further, smaller employers in less wealth sections of the country might not be able to automate, as fast food outlets, such as McDonald’s, have begun to do by placing kiosks in their establishments and reducing counter staff and cashiers. History has shown us that once these jobs are eliminated by technology, they are unlikely to ever come back.
Lawmakers are taking note of the potential hazardous effects of the minimum wages. For example, Missouri has signed into law an ordinance, which goes into effect on August 28, that will override the City of St. Louis’ minimum wage rate from $10 to $7.70 an hour.
Adding to the cost structure of small businesses hurts their profitability and long-term viability. Raising the minimum wage to $15 an hour will hurt them and, in turn, their workers if employers are no longer able to keep them on. As more studies and research become available, lawmakers must carefully consider the potentially dangerous impacts of these policies.