Million Signatures

Archive for March 3rd, 2010

In January of 2007, the federal government raised the national minimum wage.  This was old news in some states where the minimum wage had been raised months before congress took action.  No matter how you look at the increase in the cost of labor, it is going to have an impact on the business climate and on how businesses will make key decisions in 2007 and going forward.

In theory a raise in the minimum wage should be a nonevent economically.  It should be a simple adjustment for inflation which the business has already adapted to.  In fact, as inflation raises the cost of goods and the prices the business charges, one might expect the wages of workers to rise naturally to match that upward slope caused by inflation.

How you view the good or the bad of the minimum wave increase may depend on which side of the fence you reside, the employer side or the employee side.  To the employer the rise in employee costs makes doing business more expensive and affects the bottom line.  To the employee, the employer is just being competitive and paying his or her employees a salary that they can live on.  In many cases, you may be on both sides of the issue if you own or operate a business but have people in your family who are trying to get by on the minimum wage.

The hardest hit businesses by this upward push in wages is small business.  Enterprises that employ a large amount of unskilled, lower paid workers can see a huge jump in the cost of keeping employees because of state or federally mandated increases in employee pay.  Many times small business enterprises operate on a thin margin of profit and any change to the cost structure can be a deadly hit to their budgets.  Moreover, since the small business model is intensely competitive, there is little room to raise prices to clients or customers without risking losing business to a larger competitor who can absorb the minimum wage increase without increasing prices. Read the rest of this entry »