Minimum wage and the small business owner

[underpants]

I am watching on c-span2 Sen. Enzi of Wyoming making all kinds of claims about how a raise in the minimum wage affects small business owners.

One claim was that small business owners often pay their employees more than they (the business owner) makes even if they are only paying minimum wage.



Okay I can just hear some small business owners I know just enraged by an increase in the minimum wage. I don't know that they don't already pay above that (they probably do) but what are we to tell the small business owners about this?

Anyone? Inform me please.

[napi21]

1. If a business can't make it paying a fair wage, they shouldn't be

in business! Most small businesses start out doing everything themselves. Then maybe they hire some relatives. When they get going they want a little time off for themselves, so they hire some help. If they aren't making enough money to be able to pay a fair wage for the job, they either need to go back to doing everything themselves, or shut the doors.

[underpants]

4. Okay

that seems a bit harsh and I know discussing that with the guys I know wouldn't exactly be a big selling point

what about a raise NOW. I know that it would only be effective say as of July 1 of next year but what do you tell business owners who are just getting by and don't have the ability to raise their fees that quickly?

[napi21]

11. I don't claim to be an economy expert, BUT I was an accountant

for 40+ years, and retired as Dir. of Accounting. I know what iI said was harsh, but I don't believe in candy coating things. Finances and accounting are very straight forward subjects. You either have it, or you don't!

Let me try to put the idea into some perspective.

The business with the worst survival history is a restaurant. SOME are VERY successful, some barely scrimp by, but most fail. They fail because there's too much competition, and the ones that don't have that special something that keeps customers coming back are soon gone. If the Successful ones have to increase prices because of increased costs, those customers will continue to come back. The losing ones could cut their prices to $3.00 for everything, and they'd still fail, bacause they don't have the products the customers want!

It's business model that works for everyone. The business that don't, or can't make it, simply never found that wining combination of cost/profit and customer satisfaction.

[underpants]

14. Of course

strangely from how Sen.Enzi makes it sound the market rules don't apply here. He makes it sound like these are a rare bird ...or a family farmer.

I have an accounting degree myself. I just posted this to get a discussion going. I obviously put NO thought into it ahead of time.

[spinbaby]

34. I'll agree with you there

In my opinion, paying employees less will only prolong the inevitable if a business is not viable. I have a relative who whined about the "high" minimum wage for years while failing to see that his business was failing in any case. He also spent a lot of time whining that people just didn't want to work anymore, not connecting this to shit wages and abyssmal working conditions.

[ieoeja]

2. Certain jobs are exempt from minimum wage.

Maybe we should consider adding small businesses to that list? We not only lose their opposition to raising the minimum, but actually help small businesses compete against the big guys. Level the playing field a bit.

[sandnsea]

7. 50% of employees work for small business

You'd have to create a new category, under 10 employee businesses or something. That number is pretty high too though, and that's where most of the uninsured, etc., are at.

[ret5hd]

9. i completely disagree...

small businesses account for the majority of jobs in the u.s. Are we going to relegate the majority of jobs to the wages of waiter/waitress (where jobs, because of tips, already pay well below minimum wage)?

And the help that small businesses need to compete against the big boys isn't going to be met by cutting wages. How can wages in a small business compete against multi-million dollar tax incentives? And the wages that the big boys pay is often higher than their small business counterpart anyway. How low will they have to go?

[The Magistrate]

3. This Will Sound Harsh, Sir

But small business owners are not entitled to a subsidy from the government to make a profit, or even ends meet. The consequences of paying the absurdly depressed minimum wage today amount to precisely that. Persons paid at minimum wage level, even though working, are generally in range to qualify for a variety of assistance, from food stamps to some forms of general assistance. When ill, their emergency health care is paid for either by increased charges on persons with insurance, or by public hospitals. Without these things, it cannot even be said these people are paid at subsitance level. Thus, whatever any business owner of whatever size pockets of the gap between the wage paid and the actual costs of subsistance for the employee recieved from the public at large amounts to a subsidy of the business owner exacted from the public. Despite the posturing of these persons as grand individuals, wholly independent, self-starters, etc., the fact is that they are leeches on the public purse, and wholly dependent for their income on government subsidies, which are the only thing that allows them to pay out the levels of wage that they do.

[underpants]

6. Okay not to argue but...

you are calling small business men leaches??? Do you really think that helps sell our ideas?? If you do I understand that you are speaking on economic terms but I am not talking about that-I mean in real immediate terms what is the case for this?

I am FOR higher minimum wage but the backlash against it that I (sitting in the same room) will hear will be very harsh and turn them off any and all progressive ideas.

What about those who pay a living wage but may have to up it if the min.wage is raised?

[The Magistrate]

15. To My View, Sir

It is useful to press this charge. It is generally adviseable in politics to attack the foe's strong suit, and this constituency is one of those. But it is not a particularly numerous one, and is one that great a number of people actually have ambivalent feelings at best towards. The myth that "small business" are an examplar of independence and initiative, contrasted with "welfare dependence" and the like, is a stock in trade of the enemy's political agitation. That it is a fraud, a lie, a grotesque misrepresentation of the actual state of affairs, is worth pointing out, it seems to me.

Persons who already pay an adequate wage should experience no difficulty, but even so, the basic element remains: persons who insist on paying decidedly less for work than it is worth can no more expect to remain in business by exacting tribute from the public than they could if the cost of some other element of their business, from raw materials to the cost of their space could expect it. If the things that enable them to do so were openly labeled "Small Business Assistance and Subsidy Act", instead of food stamps, section eight, and the like, it would not affront me in the sligtest. There is an excellent case to be made for social benefits from widespread employment, such that the cultivation of a class of businesses that would be marginally viable at best without such subsidies, is great enough to justify them. But it is better for all concerned that the matter be addresed openly and honestly.

The fact is that just about all "welfare" benefits act as a practical matter to subsidize small businesses of one form or other, with the purported "recipient" simply acting as a channel through which the government furnishes monies to the "bold entrepenuer". It is the welfare check that keeps in business the corner groceries and cut-rate furniture shops and beauty shops and take-out joints in depressed neighborhoods, and that provides the income of the slum-lord.

[sandnsea]

17. They need to face reality though

They are always first in line to cut taxes, but don't want to pay a wage so that much of what those taxes go to wouldn't be necessary. They can't have it both ways. Perhaps leeches is too strong of a word, but WE are subsidizing business costs through low-income programs and business has got to face that reality. So do the American people. Why should low income people be stigmatized when it isn't their fault they aren't being paid a fair wage. Or, otoh, if we are already half way to a socialized country and like it that way, perhaps we should accept that and at least finish it up with national health care.

[indepat]

12. Bingo! And it's high time government quit subsidizing little businesses

the WalMarts of the world.

[bee]

19. huh? As a small business owner I take serious offense to being

called a leech on the public purse. I havent taken, asked for, or gotten shit from the government. And I cant for the life of me understand why you would paint small business owners with such a broad brush as to say that they are wholly dependent for their income on government subsidies. My employees have ALWAYS been paid a living wage... even if it meant I didnt take a check that week.. and they have always had health-care.. while I, on the other hand, do not. Believe it or not, not all small business owners operate in the manner you suggest. And as someone who's done none of the things youve accused me of, I find your post incredibly insulting.

Perhaps you meant to direct your comments to "certain" small business owners. And if so.. you really should clarify.

[The Magistrate]

21. If You, Ma'am, Conduct Yourself As You Say

Than comments aimed at enterprises dependent for their profit on such subsidies are not aimed at you, and there is no reason for you to take umbrage at them. We all have our individual experiences of the world, and our conclusions drawn from same.

[sandnsea]

5. Min. Wage is $7.25 in Oregon

Nobody has gone out of business. We had unemployment problems before we raised the minimum wage. Our minimum wage is pegged to inflation now too. The minimum wage argument is bullshit. It sounds logical, but it just isn't the key factor anymore. The biggest problem is competition from chains, you can't sell as cheaply as they do so you have to figure out how to add value so that people want to buy from you instead of the chain.

[underpants]

8. Thanks for turning my brain back on

head cold....yeah that's it.

I know this is all BS I could just feel it.

I guess that everyone on the border didn't run across to get laborers or to hire contractors from out of state huh?


I know that we raise the min.wage in the 90's and there was no great small bus. failure.

[htuttle]

16. Almost everytime you hear, "But it would hurt small _____!"

...what they really mean is that it would hurt BIG _____, and big (whatever) is using the small (whatever) as astroturf.

For example, Llook at the arguments about things like farm subsidies. The VAST majority of farm subsidies go to huge factory farms owned by multinationals. But they always find some guy in coveralls who only owns 20 cows to show up to speak in it's favor, you know...

[underpants]

18. Enzi now talking at length about how one piece of paperwork

can crash a whole business.

You are right about the one guy with 20 cows. I would assume that ADM and such really weren't all that concerned about him before or after they have him testify.

[ayeshahaqqiqa]

10. Claim of paying employees more

doesn't wash for the business where I work (4 employees, including the boss). The boss makes out just fine, thank you. He's found that when he gives folks a raise, they stay and he doesn't have to keep on training and re-training people. Productivity increases, and he makes more money. Of course, then he goes out and spends it....but its his money. I know, because I keep the books.

[underpants]

13. I know

I included that because it was so ridiculous. Enzi makes it seem like these people just woke up one day and were business owners WOW what am I going to do???

Of course. No one employs people if they don't make money off them.

[Yupster]

25. But a lot of small businesses open

knowing and expecting to lose money for a year or three years.

Therefore the workers get paid but the owner doesn't.

That happens all over.

[mcar]

30. Bingo!

The most successful small businesses I know of pay their employees a competitive wage and offers good working conditions so the employees remain happy, productive employees.

One small business owner I recently interviewed (I'm a writer) not only pays a very good hourly wage for our area, he also only works a 4 day week and staggers the 4 workday hours so his staff can be available for school conferences and the like. When an employee has been with him for 5 years, he sends employee and SO on a weekend away. 10 years, they get a week's vacation on him.

He has 6 employees; all but one have been with him for more than 5 years, some for 10. For a small dental office, that's quite a record.

The guy is also making some extremely good money so he's obviously not hurt by his policies.

[thinkingwoman]

31. That sounds great, but...

a dental office (or a doctor's office or optometrist's office) is NOT a typical small business.

My best friend and her husband own an optometrist's practice and we compared a LOT of notes (down to financial details, including salaries and benefits) when my husband and I ran a weekly newspaper. Not only was their annual gross three times ours, they were able to pay their workers $3.00 more per hour than we were and buy and renovate a building.

However, they had the same number of employees that we did, a HIGHER turn over rate among employees, and the owners went without a paycheck roughly the same number of weeks per year that we did.

The problem with any discussion about small business and wages is that "small business" is far too broad of a term. There is just too much variety of circumstance.

P.S. BOTH of our businesses paid above minimum wage...WELL above for upper level employees (ie managers), except when those managers were owners. Once owners divided salary by hours worked, we all made well BELOW minimum wage for the time we put in.

[happyslug]

20. What is a Small Business????

Some "Small Businesses" can have as many as 1500 employees and 30 Million in Average Annual Receipts (Sales) or 150 million Dollars in "Assets" (The Classification system use just one of these per type of business see the table reference below for details). Through most Classes of Small Business are defined as one that has less then 6 Million in Sales:
http://www.sba.gov/size/sizetable2002.html
(Table for "Small Business" definition by the Small Business Administration, SBA)

List of NON-Small Business determined by the SBA:
http://www.sba.gov/size/areasall.pdf

[curt_b]

22. Ohio's Minimum Wage $4.25

Ohio's minimum wage is $4.25 per hour. 92,000 Ohioans work for this wage. Hundreds of thousands of Ohioans work for the federal minimum wage of $5.15. Minimum wage has not increased since 1997. We are gathering signatures for 2006 ballot initiative to raise it to $6.85. A forty hour week at $4.25 is $8,840 per year. There are exceptions for extremely small businesses and domestic/lawn care workers. I think we're due for an increase.

[ComerPerro]

23. Republicans always pass legislation designed to cripple small businesses

in the name of helping small businesses.

Its stunning that they repeatedly get away with it

[1932]

24. Keynes -- aggregate demnad -- if employees (of small or lrg biz) don't

earn a decent wage, there will be fewer profitable small businesses in America. Small businesses depend on local consumer aggregate demand (and therefore, decent salaries of community members) more than large businesses do.

I completely agree that higher wages for small business employees tighten the margins in the short term for small businesses. However, I also believe that 99% of small businesses with realistic business plans which are out there satisfying consumer demand wil be much better off if everyone in the community is earning higher wages.

I think a lot of super-large businesses which don't satisfy consumer demand in local communities are better off with cheap labor (and these are the people controlling US politics, which is why we have a low minimum wage). But I don't think very many (if any) small businesses do better when people in the community don't have money and don't have free time and live finacially precarious or desperate, unstable lives.

[Lydia Leftcoast]

26. Basically, that's what I was going to say

A higher minimum wage creates more consumer demand. It's "trickle up" economics.

I was in Oregon when it raised its minimum wage. It requires restaurants to pay servers minimum wage, but the only effect I saw from the rise in the minimum wage was that the former $5 lunch specials at my neighborhood restaurants became $6 lunch specials.

Now that I've been in Minnesota for two years, I see that the average lunch special is $7 or $8, with a lower minimum wage than Oregon's.

[DefenseLawyer]

27. Anyone have a figure

of what percentage of minimum wage workers work for a "small business"?

[tsuki]

28. Most small biz owners I know pay above minimum wage. It

does not effect small biz as much as it effects the big box stores and the mega corps.

BTW, I would love an increase in the minimum wage. Then I could better compete with the big box stores.

Big box stores gets multi danglers, and pay minimum wage. They are really racking it in. You have no idea just how much.

[DemDogs]

29. Same stupid argument the Chamber makes all the time

Last time the minimum wage was raised, the Chamber of Commerce (a really powerful lobby) screamed that businesses would have to close and it would be worse for the American worker. They predicted huge cutbacks, layoffs and closings. None of it happened.

This is the scare tactic they think will work, and so they use it.

BTW, a small business owner who employs others and makes less than minimum wage himself is doing something wrong, and it's not that he's paying his help too much.

[nvliberal]

32. Arguments against raising the minimum wage are right-wing lies.

They've been disproven and debunked again and again.

The Republicans HATE anything that helps people raise their standard of living, that's a given. They are also beholden to the restaurant industry and firms like Wal-Mart, all the while blathering on and on about the "burden" on small businesses.

[Catchawave]

33. I saw part of Enzi's spiel....

Wasn't he claiming that minimum wage is good, because it forces people to learn new skills to better themselves? What he didn't address, how the hell are these people supposed to live while learning these new skills ? Crazy Republican!