Minimum wage is a divisive issue among small business owners, and yesterday a number of state referendums approved raising it.
In all five states in which citizens voted on the issue, the referendums to raise the minimum wage were approved, according to The New York Times. In Illinois, however, the vote was non-binding – the state legislature still must approve the wage hike. Alaska, Arkansas, Nebraska and South Dakota passed the wage increases. In Alaska, minimum wage will rise to $9.75 by 2016, in Arkansas it will jump to $8.50 by 2017, in Nebraska minimum wage will reach $9 by 2016 and South Dakotans voted to hike it to $8.50 by 2017.
Some small business owners believe that raising the minimum wage is the right thing to do, both for individuals and for the economy. However, others feel differently, and believe that they will be forced to cut employees, hours or jobs, USA Today explained.
Ken Jarosch told the publication that he will have to make changes to his business, Jarosch Bakery, if the minimum wage in Illinois is raised. If wages are hiked from $8.25 to $10, then his costs will rise about 5.5 percent.
"I'd have to increase my prices about 2.5 or 3 percent," Jarosch told USA Today.
Support strong for minimum wage raises
The Department of Labor noted that a June 2014 survey found that over 60 percent of small business owners support increasing the minimum wage to $10.10. They believe that higher pay would benefit businesses in a number of ways. For example, 58 percent of owners believe that raising the minimum wage would increase consumer spending power. In addition, 56 percent feel that increasing base pay would be beneficial to the economy. Finally, 53 percent of respondents stated that increased wages would result in lower employee turnover, more productivity and ultimately improved customer satisfaction.
And thus far, support has been strong behind raising base pay.
"Clearly there is a lot of momentum in individual states," Mark Price, a labor economist at the Keystone Research Center, told Inc. "When you see these more conservative leaning states beginning to raise the wage, that makes a big difference."
Minimum wage hikes have been exceedingly popular in a number of states, even those that are overwhelmingly conservative. Pay raises have received so much support that in many cases, the opposition has put up little fight. In fact in some cases, even when the suggested base pay far exceeds the federal minimum of $10.10 that President Obama has proposed, business owners have been supportive.
San Francisco raised the city-wide minimum wage to $15, similar to the pay hike passed in Seattle this past June. The wage hikes in both cities will occur in increments, Forbes explained. In San Francisco the minimum pay will hit $15 by 2018, meaning that a worker making base pay in the California city will make about $31,000 per year.
Small business owners who will have to revise their financial plan in order to accommodate wage hikes should consult with an expert soon.