Minimum Wage Increase and Your Small Business

Most of our small business clients probably already know that the federal minimum wage increased this week from $5.85 to $6.55 an hour. The increase is the second in a three-step process to bring the minimum wage to $7.25 an hour next year.  In California, the minimum wage was increased to $8 an hour on Janunary 1, 2008.

The increase will help workers deal with soaring energy and food costs, as described by Christopher Rugaber of the Associated Press, but many entrepreneurs are wondering if the increase will adversely affect their businesses. In fact, according to an article by Angus Loten in (published last year when the increase was first approved by the House of Representatives), most small business owners will not be hit by the increase, because they already pay their employees more than the state or federal minimums.

There is a web of interconnectedness in small businesses that is more readily apparent than in large corporations, which means that small business owners often can’t help but see and react to the financial well-being of their employees. Loten, in his article, quotes Mark McCurry, the president of a small Atlanta-based delivery service as wondering “how you could pay anyone less than [the minimum wage] in good conscience?”

This seems to be the prevailing opinion of small business-owners across the country, who, according to, generally pay employees more than minimum wage anyway, and 70% of whom reported that “raising the federal minimum wage would have little impact on their labor costs.”

Small business owners are struggling just as much as the next person with the current record inflation levels, but in an intimate work environment where the boss works side by side with employees, it’s difficult not to see how everyone is affected by the ups and downs of our recent economy. Perhaps it is for this very reason that these same small business owners are ahead of the minimum wage curve, providing for their employees and giving themselves some breathing room in the process.