Passions are flying surrounding the proposed minimum wage hike. The question is—is this bill going to be all it’s cracked up to be? Politicians seem to be split down the middle—and as we small businesses decide where we stand, it is important to be familiar with both sides. Recently, the bill has been held up in the senate – deadlocked between democrats and republicans. Hopefully, party loyalty will not keep people from deciding where they stand based on facts. Here is a shortened view of both sides, as I gather from CPA Practice Advisor, the Associated Press, and other sources:
In support:
Democrats in support of the bill are largely advocating for economic fairness with a strong focus and support of struggling individuals and families. This bill is popular amongst voters, especially the 3.3 million Americans who made minimum wage or less last year. Since the current minimum wage is barely enough to live on, this bill is meant to support the American Dream. A nonpartisan report by the Congressional Budget Office estimated that an increase to $10.10/hr in 2016 could lift 900,000 people out of poverty. Frustration is rising against those who are not in support; at a White House Event with low-wage workers, President Obama quotes: “We saw this morning a majority of senators saying yes, but almost every Republican saying no to giving America a raise…And then if they keep putting politics ahead of working Americans, you can put them out of office.”Before the vote, Sen. Tom Harkin (Iowa) asked “Who’s going to vote to give these people a fair shot at the American dream? And who’s going to vote against it?” At the end of the vote, only one democrat sided with republicans, while every voting republican but one voted against the bill. The result was a 54-42 vote, short of the 60 “yes” votes needed to keep the bill moving forward.
In opposition:
Republican politicians are largely in opposition. Not because they’re cold-hearted—but rather because the economic impact of a minimum wage hike could be harmful. The cost of goods will go up, placing a burden on the economy…. Not to mention the burden this will place on small businesses already struggling to survive.”To pay for the raises, the money has to come from somewhere,” said Sen. Mike Enzi, R-Wyo. “So if you like the dollar deal at your fast food, get ready for $1.50.” Dave McClure, writer at CPA Practice Advisor, crunched the numbers and found this result:
“Raising the minimum wage to $10.10 means that the cost of a 10 person shift for 20 hours per day (convenience store, fast food place, hotel, etc.) would increase the labor costs by more than $208,000 per year (10 persons x 20 hours per day x 365 days per year x $2.85 per hour increase in minimum wage – $208,050). To make up this cost, you would need an average across-the-board increase in prices of 26 percent. Since this applies to virtually all purchases by companies that use minimum wage workers, the result would be an annual increase in prices of $5,120 for minimum wage workers. Actually, these are just rough numbers. Figure in corporate taxes on gross income, and the total goes higher.”
Republicans cite job loss as another result with stark consequences. The same nonpartisan report by the Congressional Budget Office I mentioned before also found a potential loss of 500,000 jobs as a result of the increase. Republicans suggest focusing on creating new jobs, like permitting construction of the Keystone XL oil pipeline from Canada to Texas, rather than locking people out of the workforce. One argument I heard said that raising minimum wage means raising the bottom “rungs of the ladder,” making it more difficult for Americans to get that first job and start climbing.
Read more on the issue here: http://bigstory.ap.org/article/senate-ready-sink-effort-boost-minimum-wage
Which side are you on? And more importantly, is your small business ready for a wage increase? If you’re looking to decrease costs for your payroll or bookkeeping needs, we are here to help you by providing customized services to save you time and money. (310)534-5577 or [email protected]
