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Can The Minimum Wage Force The Hand Of Small Businesses

2206 words - 9 pages

The federal minimum wage has not been increased since the enactment of the Small Business Job Protection Act in 1996. Would increasing the minimum wage force the hand of small businesses? Would small businesses succumb to hiring less qualified employees (welfare recipients) so they can receive tax breaks and deductions for property leases? How should small business owners handle an increased minimum wage? What additional changes would small business owners make with the increase to the minimum wage law?The Small Business Act states that a small business concern is "one that is independently owned and operated and which is not dominant in its field of operation." The law also states that in determining what constitutes a small business, the definition will vary from industry to industry to reflect industry differences accurately. (1) SBA considers economic characteristics comprising the structure of an industry, including degree of competition, average firm size, start-up costs and entry barriers, and distribution of firms by size. It also considers technological changes, competition from other industries, growth trends, historical activity within an industry, unique factors occurring in the industry which may distinguish small firms from other firms, and the objectives of its programs and the impact on those programs of different size standard levels. (2)The minimum wage is the minimum hourly, daily or monthly wage that must be paid to employees or workers, according to law. The first national minimum wage law was enacted by the government of New Zealand in 1896. In the United States minimum wages were first introduced nationally in 1938. The definition is that it is the amount required by the "minimum standard of living necessary for health, efficiency, and general well-being." The minimum wage provides "a decent standard of living for families". The question is how big is a "family," and how much is required for their "decent" life and their "well-being"?Under the House bill, which passed 315-116 as part of the so-called "First 100 Hours" agenda, employers nationwide would have to pay workers no less than $7.25 an hour by 2009, up from $5.15 -- a 41 percent increase and the first in more than a decade. The bill raises the federal minimum wage to $7.25 an hour by 2009 and extends $8.3 billion of existing small business tax breaks.Paying a decent wage lowers employee turnover, improves morale and is the right thing to do. Long-term employees are way more likely to establish ongoing relationships with customers.Small business owners know that keeping workers is easier and cheaper than finding and training new ones. According to the Labor Department, roughly 2 million workers nationwide are paid the federal minimum wage or less, making up 2.7 percent of all hourly-paid workers. Half are below 25 years old, while four percent are 65 years and older.(3) In fact, it is a complicated issue with many potentially serious implications for the future of...

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