Earlier in 2013, questions about raising the minimum wage began to sweep across the nation as¬†fast food workers in New York were pushing for $15 per hour. Although New York is an¬†expensive city to live in, it causes a ripple effect throughout the nation about raising the wage¬†across the board.
While everyone would like more money, is it sustainable in today’s economy to¬†boost the minimum that employers have to give to staff?
Sounds Good, for a Single Employee
What would the impact be if minimum wage was to be bumped up by 10-percent for a single¬†employee? This means that anyone getting such a low pay would receive $7.98 per hour instead¬†of $7.25. If this employee is paid bi-weekly, he or she would get an extra $58.40 on the gross¬†income.
After taxes and other government fees, this amount could be around $45.00. Over the¬†course of a month, the employee would make around $90 extra to be put towards various bills.
Compensation of Wages Through Income
In order to pay that employee the extra $116.80 per month, that money has to come from¬†somewhere. Although larger corporations are able to compensate given the sheer income versus¬†employees that are actually getting minimum wage, smaller businesses may have a harder time.
If a small business has three full-time employees at minimum wage, that is an extra $350.40 that¬†needs to be budgeted. The daily income would have to increase by $17.52. That may not sound¬†like much to some organizations, but it could be quite monumental for small businesses that are¬†scraping by as it is. This isn’t putting into account the $9 per hour wage that is being currently¬†suggested.
Could Micro-businesses Fail?
According to the Bureau of Labor Statistics‚Äô Consumer Price Index for Urban Consumers, an¬†increase of 2.6-percent to the average employee would only cost an average of 0.03% to be¬†covered by average income of businesses. The keyword in this last sentence is “average.” What¬†about those businesses that fall below the average?
Between recent insurance adjustments and a¬†proposed wage increase, some of the smaller operations may have a much harder time to¬†recuperate from such expenses. Is this conducive to perpetuating the economy, or will these¬†smaller businesses be provided with tax breaks in order to sustain themselves?
How Much is Too Much?
The proposed increase earlier in 2013 was a hike of more than 100-percent. Although this is not¬†feasible for much of the country, supporters in New York were pushing as hard as they could for¬†the $15 per hour amount. If the movement had been successful, small businesses that paid¬†minimum wage would not be able to sustain such an increase. The labor force that was pushing¬†for this hike in the wage obviously didn’t see the ramifications it would have to a vast collection¬†of services, educational facilities and the millions of other jobs that couldn’t afford to pay¬†experienced personnel $15 per hour.
Although most small business could sustain an increase such as $17 per day, it still puts¬†additional strain on a company that is also faced with insurance adjustments and a poor¬†economy. The proposal of “trickle-down economics” in the past did not work as evident in our¬†current situation. Greater effort is needed towards creating a sustainable future before there is no¬†future to sustain.
Author Bio:¬†This is a guest post by Liz Nelson from WhiteFence.com. She is a freelance writer and blogger¬†from Houston. Questions and comments can be sent to: liznelson17 @ gmail.com.