Uncertainty abounds amongst small businesses across the United States. Entrepreneurs in a wide array of industries, especially startups, find themselves challenged in making decisions for their short, intermediate and long-term futures because of uncertainty stemming from the economy. This includes concerns about everything from proposed tax increases and healthcare mandates to a hike in the minimum wage.
The President proposed an increase in the federal minimum wage to $9 an hour from the current $7.25 during his State of the Union address. On March 5 democrats responded by sponsoring legislation that would raise the minimum to $10.10 an hour. These proposals raised conflicting reaction in Congress. Ultimately this legislation was defeated for now, but still made many business owners concerned about the future plans for their companies.
Small businesses in the United States are prime employers of members of the minimum wage workforce. Because the other potential increases in the cost of doing business are looming, most small enterprise owners balk at the idea of increase in the minimum wage. While some would sponsor a modest upward adjustment, most maintain that they simply cannot afford the type of increase espoused by either the President or the Democrats in Congress.
Small business owners are also concerned that increase in the minimum wage will draw the overall increase in the salaries. Even with the present rates many startups are so cash deprived that they have to structure various equity compensation packages in addition to monetary compensation in order to attract and retain valuable employees.
Getting any minimum wage bill through both houses of Congress may prove highly problematic for those who do support an enhancement. Although a few Republican Senators might support a more modest increase in the minimum wage, the Tea Party Caucus in the House would not likely support any increase at all.
In considering what might prove to be deemed a modest increase in the minimum wage, acceptable to a majority in the Senate and perhaps to a solid number of members of the House, would probably clock in at about $7.80 to $8.00 an hour. But, again, even this level of increase will face a huge hurdle among the Tea Party in the House of Representatives. Small business advocates definitely hope that this proposal will be postponed until the future time when the economy is much stronger than it presently is. They remind that the country still experiences the consequences of the recent financial crisis and the majority of the businesses have not recovered yet.
Considering the overall situation, a likely scenario is that any proposal to hike the minimum wage will be put off after tax issues have been dealt with, at least to some degree, and the business community has a clearer idea of what its financial burden will be during the short as well as the long term. Small business advocates insist that any increase in the minimum wage would likely result in many small business enterprises cutting back on their hiring plans or laying off the existing employees in order to make the ends meet.
Ekaterina Mouratova is a founder of The Law Firm of Ekaterina Mouratova, PLLC. She focuses her practice on business and corporate law, intellectual property and immigration law. Ekaterina successfully represents domestic and international clients in all aspects of their business and legal climates.
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