Reason 2 for Conservatives to Support Raise the Wage in South Dakota

The other day I shared that conservatives could get behind the minimum wage increase in South Dakota: Less need for welfare support.  While that seems like a solid reason to support the minimum wage, it may not be enough for some conservative minded people, so here is another reason to support an increase to the minimum wage:  It is good for small businesses.

It turns out that many small business owners actually support a minimum wage increase.  In fact according to a recent survey of small business owners.

According to a poll of 500 small business owners conducted on behalf of Small Business Majority, an advocacy group, 67 percent of these firms favor boosting the minimum wage from the current rate of $7.25 an hour and adjusting it annually as the cost of living rises. Business owners did not indicate how high the minimum wage should be.

Why would a business be willing to increase the minimum wage?  Well it turns out that one of the reasons is that many small businesses already pay much higher than the minimum wage.  Therefor an increase to $8.50 would not have a huge impact on them.  In fact according to the earlier mentioned poll of small businesses, 85% pay above the minimum wage.

Contrary to conventional portrayal, the overwhelming majority of small businesses don’t have any employees earning minimum wage. The poll found that 85 percent of small business owners pay all their employees more than the minimum wage. Minimum-wage workers are more likely to work for big chains than small businesses.

Read more here: http://www.miamiherald.com/2013/05/05/3380288/small-business-owners-across-the.html#storylink=cpy

The second reason is that a minimum wage increase would put more money into the pockets of customers of small businesses.  This helps small businesses and helps prevent against economic downturns.

Taking inflation into account, a worker earning a minimum wage today is worse off than one who made the base hourly wage of $1.60 in 1968. “It’s just really ridiculous to think that business owners can’t pay today at least as much as what they paid four decades ago,” says Holly Sklar, founder of Business for a Fair Minimum Wage, which has attracted support from more than 4,000 small business groups and owners. Main Street businesses suffer if “the economy is falling apart around them,” she says. “If the customer base is undermined because wages are so low, they feel it directly.” 

This is important because small business are the economic engine in South Dakota and could lead to faster job growth.  In fact a 2006 study that examined the history of minimum wage increase and states with higher than federal related minimum wage laws shows faster job growth.  The study explains:

This report also found that total job growth was faster in the higher minimum wage states. Faster job growth also occurred in the retail trade sector, the sector of the economy employing the most workers at low wages, in the higher minimum wage states. 

The simplistic introductory economics prediction that an increase in the minimum wage will result in job loss clearly is not supported by the actual job growth record. Rather, faced with an increase in the minimum wage, small businesses may have benefited from some combination of higher productivity through improved worker retention and savings on recruitment and training. There may also be a “Henry Ford” effect at work: if you pay workers more, they can buy more, boosting the overall economy, especially among small retail businesses. 

So Republicans, if you were afraid of supporting a cause like "Raise the Wage," you can feel a little more comfortable knowing that this action will reduce the need for welfare and will help small businesses.