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Small-Business Owners Are Split on the Federal Minimum Wage Debate

The federal minimum wage of $ 7.25 per hour has stayed the same since 2009. But with the majority of states already enforcing minimums beyond that amount, there’s a growing debate about whether the federal rate is overdue for an increase. That debate came into stark focus last year as the “Fight for $ 15” movement gained traction across the country. The push for this increased pay minimum was highly polarizing, with supporters publicly rallying around the increase and those in opposition decrying the proposal as inevitably harmful to the lowest-earning workers.

When it comes to the question of raising the federal minimum wage, small-business leaders are similarly divided, a recent BizBuySell survey revealed. The survey – which polled over 700 small-business owners and prospective buyers – found that among owners, 47 percent support raising the federal minimum wage while 40 percent oppose it. Another 13 percent said they have no opinion. On the other hand, prospective small-business buyers are much more likely to support boosting the federal minimum, with 58 percent indicating they’re in favor. To truly determine small-business sentiment on the matter, it’s important to examine the reasoning from both sides.

Related: The Minimum Wage Battle Is Here to Stay #Franchise500

Small-business support for a federal minimum wage increase.

Small-business owners and prospective buyers who said they endorse raising the federal minimum wage highlighted two key reasons:

Positive economic impact: A number of respondents argued that increasing the federal minimum will not only positively impact individual workers, but the economy as a whole. As a surveyed potential small business buyer put it, larger paychecks bring “more economic activity,” while another business owner offered that, “Once people start earning decent pay, spending will rise as well.”

Over-staffing of businesses paying federal minimum: Other small-business owners who support a higher minimum suggested that businesses that only pay the federal minimum are being financially irresponsible by staffing beyond their means. Instead, as one respondent argued, small businesses should concentrate staffing to a group they can afford to pay beyond the minimum.

Related: The Small-Business Guide to Managing Minimum Wage Increases

Opposition to increase minimum wage.

Respondents to BizBuySell’s poll who don’t support raising the federal minimum pointed to several reasons for their opposition, including:

Pessimism about employees’ work ethic: Some owners and prospective buyers see a widespread problem with diminishing employee work ethic, which is lowering business output. They feel this problem will only be compounded by raising the federal minimum. According to one small-business owner, “Higher wage without higher productivity = dead biz.”

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