An issue that advocates of small business continually fight is minimum wage legislation. The NFIB raises numerous concerns over the consequences of increasing the minimum wage:
– The Kennedy amendment would enact the largest increase ever in the starting wage, $2.10 over two years. A 36 percent increase in labor costs would place a huge burden on small businesses.
– Many small employers already are facing 15 percent to 20 percent increases in health insurance premiums. A large minimum-wage increase not only adds to these labor costs but also could force employers to cut back on health-care coverage or other fringe benefits that they need to attract workers.
– Nearly two-thirds of minimum-wage workers move above the minimum wage within one year. Most minimum-wage jobs are entry-level jobs that are not lifelong dead-end jobs. These jobs allow Americans to establish a track record of work that creates opportunities for better paying jobs.
– Higher mandated wages reduce employment opportunities for the least skilled and cause shifts in the profile of those who get hired as employers favor more highly skilled applicants. And as entry-level unskilled job opportunities disappear, welfare recipients have a more difficult time finding work. Thus, those who most need assistance are helped the least.
– Minimum-wage hikes have ripple effects on the economy, often having unintended consequences against the entry-level earners the minimum-wage proponents profess to help. When small business and employees are hurt, it’s a double whammy for the economy.
One unintended consequence that can happen when you meddle with a market is that small business owners just give up and close their businesses. However, sometimes entrepreneurs and other innovators will find a way to work around onerous regulations. BoingBoing.net has a wonderful example of this related to minimum wage.
Abir Majumdar says: “I went to one of those Taco Bell/KFC hybrids in Morrisville, NC and all the ordering was done through the gigantic touchscreens. No humans take orders there. You go to the machines and you’re presented by an animated Colonel and talking taco. Then you put in an order as if you were at amazon. You can pay with cash and credit card.”