Small-Business Owners Split on Raising Minimum Wage
With the increased likelihood of raising the minimum wage, small business owners have different opinions on the impacts that could arise from this trend. Notably, the labor market has ruptured since the minimum wage is anchoring the bottom of the workforce while the high-tech professionals are enjoying rapid upward mobility at the top.
It is undisputable that some corporations and competitors have a stranglehold on the key financial, production, distribution, and ideological links of the economy. This condition may push small business firms to pay more to their workers to prevent them from drifting to more competitive packages in other businesses. According to the research by Vistage International, 7% of small business owners indicated that the pressure created by the competitors is likely to escalate. The latest study indicated that those who supported and who were against the move correlated at 49%. If this strategy is implemented, by 2020, the minimum wage of workers will be $ 15 an hour.
At the periphery of the modern economy the myriad of small businesses, most of which have only local or regional importance. Many periphery firms serve as satellites to the dominant corporations, supplying them with inputs or channeling their products to the final purchaser. These periphery firms comprise the competitive fringe for center enterprises, serving regional markets or producing single line products. The power to make wage decisions, hence, is retained by the competitors. With the competitions between the larger firms and small businesses, the survival prospects of the small businesses are precarious; they are perpetually short of cash, feel squeezed by government regulations, taxes, minimum wage laws, unions and threatened by the prospect of elimination at the hands of larger rivals.
To be sure, if the minimum wage pegged to 50% of the average industrial wage and indexed to inflation, there would be consequences. Some researchers cast doubt on the notion that there would necessarily be a reflexive laying off workers, an increase of this size would certainly stimulate the economy and promote modernization. In the past, modernization has erased small firms who lacked the financial capacity to remain competitive. To defer modernization out of a fear of its effect on small businesses, and then, is to shackle the economy to a low-wage, low-skill strategy. In the end, this strategy is perhaps the ultimate price we pay for maintenance of a low minimum wage.
Nevertheless, it is remains a fact that the sense of stability and comfort has been lost, and with it, the sense that this stability and comfort might gradually be extended to include an ever larger number of people. “Until last quarter of the last quarter of the twentieth century, most Americans were supposed to experience a discernible improvement in their standards of living” (Daily Labor Report 25). If it did not happen to them, with luck, they would live long enough to see it happen to their children.
In response to these changes, the small businesses are adopted a new business strategies by avoiding to hire more workers. Some employees maintain that they would consider raising the minimum wage for their workers if they have an attractive work record for at least one year.
Correspondingly, there will be a wide economy effect in setting up the minimum wage above the average wage. The impact will be translated into the marginal cost of production and operation practices of various firms. When the price of the output rises, there will the reduction in the production as the demand also falls. . According to Neumark (2008), “This evolution does not have to be planned by the firm’s owners or managers; firms with fewer mandates may be more competitive and grow faster than others, thereby extending an exemption to more employers” (354).
Work Cited
Adam Janofsky and Leslie Josephs. Small-Business Owners Split on Raising Minimum Wage. Retrieved from:
http://blogs.wsj.com/economics/2015/06/12/small-business-owners-evenly-split-on-raising-federal-minimum -wage/