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’ 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.