In a Jan. 30 Gazette article, James Q. Lynch reported on 1st District U.S. Rep. Ashley Hinson’s claim that the COVID-19 relief package currently under consideration is “full of liberal policy wish list ideas” like raising the minimum wage, which would be a “poison pill” to small businesses and the rural economy. Neither Hinson nor Lynch provided any evidence to support that oft-repeated claim, or offered an alternative remedy for low-wage workers. Just a cursory data search revealed much that contradicts Hinson’s claim that higher wages would be the death knell for small businesses.
Let’s start with a CNBC survey of all small business owners in the U.S. in the first quarter of 2020. In that survey, 57% said they expected no impact on their business from a minimum-wage increase. Only 14% said a higher minimum wage would result in a drop in revenue for their business. If the majority of small business owners are not overly concerned about a minimum-wage increase, is Hinson creating a tempest in a teapot?
Digging deeper, a study by the Fiscal Policy Institute investigated small business activity from 1998 to 2001 in states that had raised the minimum wage and those that had not. The results of that research revealed that increasing the minimum wage did not “kill” small businesses. On the contrary, raising the minimum wage seemed to allow business owners to start new businesses and attract new, more highly skilled workers. Hinson’s claim would lead one to expect small business growth to be lower in states with higher minimum wages. But according to the study, during those three years the number of small businesses grew two times faster in states with higher minimum wages than in other states.
Research published in the Journal of Economic Issues in 2016 found no correlation between an increase in the minimum wage and small business failures. In fact, as in the aforementioned study, it found just the opposite to be true.
To be fair, some business groups like the National Federation of Independent Businesses (e.g., Walmart) and the National Restaurant Association (e.g., McDonald’s) have voiced loud opposition to a higher minimum wage. These business behemoths want to keep their salaries low and their profits high. Of course they do. But those profits do not stay within the low-wage workers’ communities.
The massive gap between rich and poor is inarguably one of the biggest threats to America’s safety and security right now. It is tearing the country apart. The evidence seems to indicate that a federal minimum wage hike will not only benefit hardworking Americans desperate to succeed and support their families in these trying times, but also give a boost to small businesses. When workers have a few more dollars in their pockets, they will spend those dollars at local businesses, allowing those businesses to grow and flourish. It’s a win-win. It’s time for Rep. Hinson to abandon her partisan rhetoric and focus on the facts, especially when the facts benefit everyone, regardless of their party affiliation.
I volunteer for organizations that provide assistance to low-income individuals in our community. I witness their struggle and sense of hopelessness. A higher minimum wage would go a long way toward giving them, our community, and our country a brighter future.
Sheri Albrecht lives in Walford.