Opinion: Businesses Can’t Afford The Proposed $10-Per-Hour Minimum Wage

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Shuttered businesses in Detroit, MI (Photo by Spencer Platt/Getty Images)

Shuttered businesses in Detroit, MI (Photo by Spencer Platt/Getty Images)

The Right Politics

U.S. Rep. Jesse Jackson Jr. from the South Side of Chicago is introducing a $10-per-hour minimum wage across the nation. As a representative, he introduced the measure to his fellow-congressmen in the House yesterday.

It has been five years since the federal minimum wage has been raised. The employees affected are those that are covered by federal minimum wage laws. In 2007, it was set at $7.25 which means Jackson is asking the lawmakers to boost the minimum wage approximately 38% over the five-year period. Though some may argue that an increase is overdue, $2.75 in five years is a huge increase.

The Fair Minimum Wage Act of 2007 was designed to increase salaries in three steps. The last step increased wages on July 24, 2009. When passed, the Act of 2007 was a rider of the U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability Appropriations Act. That bill gave small businesses nearly $5 billion in tax cuts.

How small businesses may or may not be rewarded for accommodating the congressmen’s suggested pay increases have not been detailed.

Without knowing if there are any serious helpful measures to assist small businesses with such a huge minimum wage increase, the passage of Jackson’s proposal could be devastating to small business owners. In the past, owners have claimed that increasing hourly wages could put them out of business. With the current state of the economy throughout the United States, the response from small business owners will be the same – only spoken more forcefully. After all, the economy is much worse in 2012 than it was in 2007.

If businesses need to lay off workers, cut employee’s hours, or even close their businesses due to an extreme hike in the minimum wage, the nation’s current dismal unemployment rate of 8.2% will definitely increase. It’s quite ironic that a Democratic lawmaker such as Jackson is asking for this just before a national election. After all, the promotion and subsequent passage of such a law most assuredly spotlights the troubled economy under a Democratic administration.

Businesses will suffer, laid-off employees will suffer more, and the heightened unemployment rate will give Americans more reason to be discontent with the president and congress.

Jackson has said that he was encouraged to introduce the legislation by Ralph Nader. While consumers – the public-at-large – are often favorable to Nader’s actions for looking out for them financially, he often has measures that are not favorable to businesses which influence the national economy a great deal.

Now is definitely not the time for Rep. Jesse Jackson, Jr. to bring up the subject of pay increases. Instead, he should be joining forces with other lawmakers to help businesses – big and small – survive and to help people find jobs at the pay rate that is currently afforded them. Encouraging companies to hire – not lay off – should be the goal.

States that feel their businesses can handle a higher minimum wage can adjust their figures. For example, in Illinois the rate is $8.25 per hour, in general. In the state, businesses may pay workers under the age of 18 fifty cents less, $7.75. Employees who work for gratuities make $4.95 and may claim credit for tips, as high as 40% of their wage.

The range in wages throughout the nation has a significant span – depending on what state governments believe their locales should handle. The state of Washington, for example, has the highest minimum wage in the nation at $9.04 already.

It would be much better to leave the national minimum wage as is and allow state governments to make upward adjustments as their economy and business communities can handle.

About Scott Paulson

Scott Paulson writes political commentary for Examiner.com and teaches English at a community college in the Chicago area. The views and opinions expressed in this post are those of the author and do not necessarily reflect the official policy or position of CBS Local.

 

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