Why Small Business Employers Support a Minimum Wage Hike

April 20, 2016 Pete Jansons

Target recently made headlines when sources reported the retail giant would boost its minimum wage for employees to $10 per hour. Analysts explain the move as an effort to attract and maintain talent, especially since rival Wal-Mart has already delivered on its promise from February 2015 to raise base pay in 2016. The action also may be seen as a response to Fight for $15, a highly publicized push by labor groups for a $15 per hour minimum “living wage.”

Employee wages typically represent a significant expense for companies of any size. But like their larger counterparts, many small business employers see value in upping salaries. In fact, a 2015 CareerBuilder survey found that 65 percent of small business employers believe the minimum wage should be increased in their states. Note, however, that when asked what they consider to be a fair minimum wage, the majority gave answers under $15 per hour:

  • $7.25 per hour: 6 percent
  • $8.00-$9.00 per hour: 24 percent
  • $10.00 per hour: 27 percent
  • $11.00-14.00 per hour: 23 percent
  • $15.00 or more per hour: 11 percent
  • No set minimum wage: 9 percent

Supporters of raising the minimum wage see a variety of potential benefits, both for their own company and for the nation. Among small business employers who want an increase in their state, their reasons for increasing the wage include:

  • It can improve the standard of living: 72 percent
  • It can have a positive effect on employee retention: 58 percent
  • It can help bolster the economy: 55 percent
  • It can increase consumer spending: 50 percent
  • Employees may be more productive/deliver higher quality work: 50 percent
  • It can afford workers the opportunity to pursue more training or education: 38 percent
  • It can boost the quality of job candidates my company receives: 36 percent


The current federal minimum wage for covered nonexempt employees is $7.25 per hour. Assuming a 40-hour workweek, this translates into a yearly salary of $15,080. For a one-person household, the Department of Health and Human Services considers$11,880 as the 2016 poverty guideline. For a family of three, this figure stands at $20,160.

Many states also have minimum wage laws. The U.S. Department of Labor dictates that “in cases where an employee is subject to both the state and federal minimum wage laws, the employee is entitled to the higher of the two minimum wages.” As of January 1, 2016, twenty-nine states and Washington, D.C., posted minimum wage rates higher than the national figure. (To see how your state fares, check out this DOL table.)


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