How Would Raising the Minimum Wage Affect Small Businesses ?

therightside.org

Would you like more money in your pocket? Of course you would. Would you still want that money if it would eventually kill your livelihood by making your small business fail? According to, Values & Capitalism, a website that promotes Christian values in the free market, Small businesses can’t afford to raise the minimum wage and still keep the same amount of employees, so they’d make less of a profit, and therefore would be unable to keep up with competition because they can’t afford training, employees, technology and new products.

If the government were to raise the minimum wage, small businesses would take the hit. They wouldn’t survive because most of them can’t afford to raise their prices and lose profit while being forced to pay their employees much more. For example, ““when government holds the gun to a business owner’s head and says “‘pay your employees more than their time is worth to you,’” the boss has a few options. He can fire some employees and pay others more, he can leave the area to avoid the government, or he can take a loss and likely go out of business” raising the minimum wage would only hurt employers. Firing employees would decrease the company's productivity and overall output, while the demand of their products/services would remain constant. If they leave the area, they stop providing for the area where they were once located, and if it resulted in a domino effect and eventually damage the overall economy in said area. If the employer were to take the hit, they’d eventually go out of business, causing them to lose their livelihood and be out of work, along with all their other employees.

Small businesses would be most effected by raising the minimum wage, since they typically make way less than a large corporations. If small businesses were required to use more of their profit to pay employees, they’d put themselves at a great disadvantage because they wouldn’t be able to keep up on training, technology, or even being able to pay their employees. An example of this would be, “The idea that a business’ profit should be entirely redistributed to employees will only make that business less effective. Without extra money to invest in new products, research and development, and even training for employees, a business would not be as effective in helping its customers. If a business loses customers, it cannot afford to pay employees. Without profit, no one gets paid”. This proves that businesses that are forced to pay their employees more of their profits can’t afford to keep up with their competitors. Since they can’t afford technology, training, or new products, they will lose business to their competitors and won’t make much profit at all. Without that profit, they won’t be able to afford to pay their employees, or even keep their business open. Raising the minimum wage would mean the end of the road for many small businesses.

Future Research Question: What are the pros & cons of raising the minimum wage on workers?