The minimum wage is one of those quagmire-type issues that have seemed to flock to the forefront as of late.
Both Gov. Andrew Cuomo and, more recently, President Barack Obama have advocated for a hike in the minimum wage from the current $7.25 federal minimum to $9 an hour. It’s not a bad conversation to have, especially as the gap between poor and rich widens and the number of Americans in the middle class spirals downwards.
According to the Bureau of Labor Statistics, 59 percent of all workers are paid hourly. About 5 percent of them, or 3.8 million Americans, work for $7.25, the federal minimum wage, or less. That’s a lot of people whose lives would be immediately improved and who would put more money into the economy should the minimum wage be increased.
But there are ramifications to the proposal, the most obvious being the immediate impact it would have on employers who have to pay their workers 25 percent more. (And even though minimum wage employees make up a relatively small percentage of the workforce, the hike would assumedly work its way up the line to make for higher wages for all.)
The vast majority of businesses in this country employ fewer than 30 people. Yet while politicians are simply fervent about being “pro-small business,” few of the policies that have been adopted in recent memory are of any help to most of these organizations.
Case in point: so-called Obamacare. One sticking point of the health care overhaul was the theory making health insurance mandatory would increase the pool of premium payers, thus pushing the average cost of health care coverage down.
That may very well end up being the eventual case, but in the short term what businesses are finding out is premiums are spiking in 2013, arriving along with a raft of new paperwork that becomes so onerous for businesses with more than 50 workers many employers in a good position might choose to hunker down rather than grow—in other words, the exact opposite of what is needed to climb out of a recession.
The Affordable Care Act was founded on the best of principles and aimed at solving a terrible social injustice. And so is a proposal to increase the minimum wage.
So how to avoid the seemingly inevitable pitfall of further straining businesses? We say the way out of this apparent unsolvable quandary is clear.
Increase the minimum wage to a more livable level (even a $9-per-hour job is still tough going in many places), but couple that with meaningful changes to meaningless labor regulations and cuts to payroll taxes. In order to ensure this does not fuel corporate largesse, restrict these changes to small businesses.
Though the common theme we’re fed pits government against business as the champion of the working man, we’d wager many if not most employers would rather pass higher wages to their workers (ensuring happier and more competent people) than send the money to the tax man.