The $15 Minimum Wage: Is it Likely and How Will It Affect the Small Business?

By: Kathryn Olon

On November 29, 2012, over 100 fast-food employees in New York City walked out of their jobs in a strike for higher wages.  These workers were employed at a variety of New York fast-casual restaurants, including McDonald’s, Burger King, Wendy’s, Domino’s, Papa John’s, Kentucky Fried Chicken, and Pizza Hut.  In doing so, their hope was to raise the federal minimum wage from $7.25 per hour to $15.00 per hour nationwide.   This was the beginning of the movement now known as “Fight for $15,” a political movement that has since involved strikes by workers employed in childcare, home healthcare, airports, gas station service, convenience stores, and fast food with the hope of increasing wages and the right to form labor unions. 

Although at the time an increased minimum wage seemed like an impossible goal, a mere 9 years later, 29 states and 32 cities and counties agreed to raise the minimum wage three weeks ago.  In 27 of these places, the wage was raised to at least $15.00 an hour.  This marks a $7.75 increase per hour above the current national minimum wage of $7.25.

Though this may be seen by many as a victory for the “Fight for $15” movement, for the small business, this increase may be more concerning than beneficial, especially considering the current economic climate. As the COVID-19 global pandemic continues to affect the American economy, the majority of small businesses are struggling to pay rent. Ultimately, increasing the minimum wage during this economically tenuous time would force businesses to choose between raising wages or terminating an employee.

Even worse, a higher minimum wage may mean that these small businesses are forced to close their doors for good. During the past 10 months of the COVID-19 pandemic, nearly half of small businesses have made less than 75% of last year’s revenue, with some making less than 50% of last year’s earnings.  These decreased earnings further illustrate the trouble that small businesses face due to minimum wage hikes.

Additionally, most minimum wage positions are entry-level positions.  If small businesses are unable to hire as many workers due to a mandatory higher wage, minimum wage increases could worsen the unemployment levels.   Because of these concerns, some states, such as Virginia, have chosen to delay their minimum wage increase.  Michigan is also considering delaying its increase, though Florida voters recently approved a gradual annual increase that would raise the state’s minimum wage to $15 an hour by 2026.

Currently, Governor Tom Wolf is proposing to raise the minimum wage in Pennsylvania to $12 per hour by July 1, 2021, with an ultimate goal of reaching $15 an hour by the year 2027.  To accomplish this goal, Wolf’s proposal involves raising the minimum wage at an increase of 50 cents per hour.   This is shocking news to many Pennsylvania residents, who haven’t seen a minimum wage increase since 2009, over a decade.  In fact, this planned increase of minimum wage in Pennsylvania is being proposed as part of the Commonwealth’s pandemic recovery plan.  Among this plan are not only statewide mandated pay increases, but also financial support for small businesses that are suffering.  This would involve Pennsylvania’s General Assembly appropriating $145 million in reserves from the Workers Compensation Security Fund to assist businesses economically impacted by the pandemic.  The ultimate goal is to provide Pennsylvanians with well-paying jobs while simultaneously ensuring that adversely affected businesses receive the support that they need.

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