Small Business Fear Minimum Wage Hike Would Kill Jobs

By: Lindsay Veremis Email
By: Lindsay Veremis Email

"A family with two kids that earns the minimum wage still lives below the poverty line, that's wrong,"

President Barack Obama

Hundreds of thousands of Michiganders could see a bump in their hourly wage, if President Barack Obama gets his way.

The president called for a $9 minimum wage in his State of the Union address Tuesday. Michigan's minimum wage is currently $7.40, just higher than the national $7.25 rate.

Advocates for the state's low income population are applauding the proposal, but small businesses worry it could be a job killer.

"I don't see anything wrong with anybody earning $9 an hour, $10, they deserve it," restaurant owner Bill Falsetta said. "They work hard, people in this industry work hard."

But with the current economy, Falsetta doesn't see how small businesses can make it happen. Margins are tight already and about forty percent of his forty employees are minimum wage.

"Where's that money coming from? Is gas going down? No," he said.

Falsetta says there is no way his restaurant could swallow the cost of a minimum wage increase, on top of insurance changes under the federal Affordable Care Act. The only option is one he hates, price increases.

During his address Tuesday, President Obama argues the current minimum wage is not livable.

"A family with two kids that earns the minimum wage still lives below the poverty line, that's wrong," he said.

In addition to the boost to $9, Obama wants minimum wage to be tied to the cost of living, so increases are guaranteed to meet inflation.

"The vast majority of people here in Michigan that get minimum wage are over 20-years-old, many of them are partially college educated, many of them are working full time, many of them are parents, many of them are sole-bread winners for their family," Karen Holcomb-Merrill, with the Michigan League for Public Policy explained. "So, this isn't just about helping teens make more money, this is about helping families here in Michigan."

Holcomb-Merrill also says it's good for the economy. She says workers who are paid more, spend more.

The Michigan Restaurant Association sees it differently.

"Wage mandates of any kind don't exist in a bubble," Justin Winslow, with the association said. "So for us and all of our small business owners, you're talking about a decrease in the overall number of jobs and in the amount of hours worked by these employees that still exist."

The federal minimum wage hasn't changed since 2009. Under Obama's plan, it would increase gradually to $9 by 2015.

A Michigan lawmaker is also calling for higher wages. On Tuesday, Bert Johnson introduced legislation that would bump up the state's rate to $10.

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  • by Anonymous on Feb 20, 2013 at 11:14 AM
    Every time this minimum wage issue gets raised the same arguments get thrown out there and the same thing happens...the wage amount goes up and businesses pass on the cost to the consumers.
  • by anonymous Location: howell on Feb 20, 2013 at 07:43 AM
    just wait till right to work small business will be out anyway as wages will go down and people wont buy as much
  • by Rick Location: Stockbridge on Feb 14, 2013 at 08:31 AM
    I can't figure out why seniors and everyone else living on a fixed income are being left out of this discussion. They should be screaming! The buying power of their dollar is diminished every time the ENTRY LEVEL wage goes up. When the bottom wage earner makes more, the prices of everything reflect that, and the folks that are living on fixed incomes which don't see the same increase get screwed. Kind of sounds like Obama wants to throw Grandma off the cliff now, as long as he thinks that he will gain support of the young and stupid.
  • by Name Location: Location on Feb 14, 2013 at 04:16 AM
    Under Obama and Grandholm, my wages as a skilled tradesman haven't gone up either. 51% of the uninformed!?!?!?
  • by Name Location: Location on Feb 13, 2013 at 03:56 PM
    No matter what you have as minimum wage, a lunch time meal will always cost about 45 minutes wage. Rent will be about 100 hours. A new car will be about 2000 hours. And a grocery bill at the store will be about 10 hours of work a week. It has not changed much.
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