A minimal wage of $ 15 means layoffs, say a 3rd of small companies

Senator Bernie Sanders, I-Vt., Speaks during an event introducing the Raise The Wage Act on January 16, 2019 at the U.S. Capitol.

Chip Somodevilla | Getty Images

A third of small business owners say they are likely to be laid off workers if Congress increases the federal minimum wage to $ 15 an hour. This comes from the latest quarterly poll by CNBC | SurveyMonkey Small Business.

The federal minimum wage battle has emerged as one of the more controversial elements of the larger battle on Capitol Hill for President Biden’s $ 1.9 trillion Covid aid package.

A Democratically-led bill introduced last month, officially known as the Raise the Wage Act, was struck from a Senate bill last week, and President Biden said a raise was unlikely on Sunday. However, the House Education and Labor Committee included the provision in a first draft released this week, officially known as Biden’s American bailout plan. Democrats want to push the broader bill by advocating reconciliation, a process that does not require broad Republican support.

Overall, 54% of small businesses are opposed to raising the minimum wage. This comes from the CNBC | SurveyMonkey Small Business Survey for the first quarter of 2021, which includes nationwide responses from 2,111 small business owners and was conducted January 25 through January 25. 31 Using the SurveyMonkey Platform.

Twenty percent of small business owners said they would be forced to lay off workers if the minimum wage rose to $ 15 / hour, while another 13 percent said they would likely increase wages for some workers while firing others.

Minimum wage policy

The minimum wage war on Main Street is split according to party lines. Small business owners who identify as Democrats were more than four times more likely than Republicans (89% versus 20%) to support the minimum wage hike, although small business demographics are generally conservative.

A survey of small business owners to raise the federal minimum wage to $ 15 an hour shows that Main Street partisans have split on the matter.

This is in part because more Republicans than Democrats say they will be directly affected by a federal minimum wage increase: 55% of Republicans but only 38% of Democrats say they need to raise wages, lay off workers, or do both to comply with the proposed change. However, the survey shows that the divide between the partisans is deeper.

“There are clearly fundamental political differences based on partisanship,” said Laura Wronski, manager of research science at SurveyMonkey, via email. She noted that Republicans who must take steps to meet a $ 15 minimum wage are more likely to say they will be laid off workers than to raise workers’ wages, while Democrats must take steps to meet the minimum wage rather, raise wages rather than lay off workers.

Republican small business owners (44%) are far more likely than Democratic small business owners (11%) to say a higher minimum wage will force them to lay off – this includes 28% of Republicans saying they need to lay off workers and 16% saying they need to lay off some workers but raise wages for others.

According to the non-small business owner response group to the survey, the higher federal minimum wage has broad public support (65% support, 33% oppose).

A recent analysis by the Impartial Congressional Budget Office predicts that an increase in the minimum wage could bring about 900,000 Americans to the poverty line and affect a total of 27 million Americans who earn below or above the minimum wage. The CBO forecast also projects a deficit of $ 54 billion by 2031 and 1.4 million fewer jobs.

Pandemic fears and hopes for relief on Main Street

For some small business owners already hit by pandemic standstills and the economic downturn, more than doubling the minimum leads to higher costs, layoffs and potential lockdown deals. A majority of small business owners support President Biden’s $ 1.9 trillion bid relief plan at a time when confidence in Main Street is waning and small business owners fears they won’t get another, according to CNBC poll Year can endure, increase.

“We appreciate the feeling of lifting people out of poverty, but I think you looked at the unintended consequences of laying off many people from their jobs,” said Molly Day, vice president of public affairs at the National Small Business Association.

The organization and most of its members have long spoken out against minimum wage increases, and the proposed bill is particularly difficult for companies with low profit margins, Day said.

Corporate America, including an influential trading group that represents the biggest companies like Walmart, JP Morgan, and Apple, believes the battle for the minimum wage is an obstacle to overcoming the relief small businesses need and that many of the largest Companies in the country that support a higher minimum wage and already paying one is not the time to settle the matter nationally.

“Enforcing a minimum wage hike which can be very detrimental to small businesses in the short term if it is not designed to take into account regional differences and reasonable outsourcing … the negotiations and this package will take a long time is not the place to do it “Business Roundtable President and CEO Josh Bolten recently told CNBC.

Some of the best CEOs in the country brought this case directly to President Biden.

Proponents of raising the minimum wage argue that it has the potential to improve worker productivity, reduce worker turnover, and put more money back into the economy, said Didier Trinh, director of government affairs for the Main Street Alliance, a progressive trade group for small businesses.

Small business owners like Aaron Seyedian have long used the MIT Living Wage Calculator to take into account the cost of living and set wages, which vary by region. Seyedian, who employs ten people in his DC area store called Well-Paid Maids, is willing to pay his employees more if it means they can keep their phones on and prevent canceled shifts or assignments.

“Even if it moves a dollar, I think that makes a big difference in someone’s life,” he said.

Geography influences the level of support for a higher minimum wage. Small business owners in the Pacific region (Alaska, California, Hawaii, Oregon, Washington) and the Mid Atlantic (New Jersey, New York, Pennsylvania) support a minimum wage of $ 15 the most, and some also most likely don’t have the wages increase or lay off workers to comply with the proposed change.

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