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October 1, 2023

Why Some Business Owners Want to Raise the Minimum Wage to Spur Economic Recovery

Why Some Business Owners Want to Raise the Minimum Wage to Spur Economic Recovery

A coalition of business owners is sweet on the minimum wage increases that kicked off the new year since they believe the wage hikes can boost economic recovery. 

More than 20 states increased their minimum wage as the year began and an additional four states, plus the nation’s capital, will see minimum wage raises later in the year, according to Business for a Fair Minimum Wage. The organization is a network of more than 1,000 employers and business organizations that favors a federal minimum wage increase–thinking that runs counter to conventional economic arguments.

In fact, the organization recently nabbed hundreds of signatures from businesses and other groups — including the likes of Ben & Jerry’s, Patagonia and Dr. Bronner’s — in support of its statement advocating for a $15 federal minimum wage. Both businesses and workers get hurt when the minimum is too low, says Holly Sklar, the CEO of Business for a Fair Minimum Wage.

“Minimum wage raises pay off in increased consumer spending and better employee retention, productivity and customer service,” Sklar says, adding that state increases are “vital” for strengthening the country’s economic recovery.

While proponents like Sklar highlight the need for a living wage and the disparities that low-income workers face, some economists remain concerned over potential job losses and reductions in overall hiring. Raise the minimum too high and some jobs risk being replaced by automation is one counterpoint. The federal minimum wage remains stuck at $7.25 per hour, a figure that hasn’t changed since 2009. (It would have to be more than $9 an hour just to keep up with inflation.)

California increased its minimum to $15 on January 1, one of the highest in the nation. But small businesses with fewer than 25 workers have an additional year to comply. Some states such as Michigan have yet to crack the $10 threshold in the new year; there the minimum is $9.87. But many states are on track for annual increases in the years to come. 

The minimum wage upticks arrive as more governments continue to enhance wage-related transparency measures. The New York City Council recently passed a bill that will require employers in the Big Apple to post salary ranges on job listings. And as The Great Resignation extends into the new year, many employers are on notice that their compensation and incentives offerings had better be anything but minimum if they want to hang onto their employees.

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