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In his last State of the Union address, President Obama discussed raising the federal minimum wage to $10.10 an hour. Many other political leaders, like the mayor of Seattle, Washington, however, have already taken steps to raise the local minimum wage significantly higher to $15 an hour. What will these increases mean to owners of franchise businesses, especially those that are already struggling? It depends who you ask. Many business advocates are screaming that the increased labor costs will force businesses to lay off workers, raise prices or close altogether. Labor advocates, on the other hand, argue that the fresh influx of disposable income will invigorate the economy and boost all business.

Minimum Wage And The Impact On Your Business

Higher Minimum Wage: A Roadblock to Business?

Both sides of the argument were laid out in the article “Does a Higher Minimum Wage Hurt Franchising?” According to a press release, the president of the International Franchise Association stated that any significant boost in minimum wages would lead to “higher prices for consumers, lower foot traffic and sales for franchise owners, and ultimately, lost jobs and opportunities for employees to become managers or franchise owners. The franchise industry is a proven job creator and career builder, yet efforts to double the minimum wage to $15 would clearly jeopardize opportunities for existing and prospective employees.”

Could Higher Wages Help Businesses Profit?

The chief Legal officer at Costco, however, disagrees with the statements made by the IFA president. He said there is a “fundamental misunderstanding among many employers who focus on how little they can pay.” Well-paid workers, he argues, are much happier than those who struggle financially even though they work full time. “If you have the best people in the marketplace working very hard because they’re being paid better, you end up spending less on labor, not more,” the Costco executive said.

Myths Surrounding the Minimum Wage Discussion

According to the Department of Labor, there are many myths floating around the wage debate. Many believe that a minimum wage hike will only benefit teenagers working for pocket money. This is not true. 88 percent of minimum wage workers are over the age of 20. Other people believe that small businesses are unified against a raise in minimum wage because they can not afford it. The reality is that three out of five small business owners support the increase and think it would be good for business.

Whether you support it or not, it appears all but certain that a minimum wage increase is coming. The sensitive political nature of the topic has resulted in a split in opinions that has largely fallen along partisan lines. But it is up to the individual business owner to conduct real research, cut throughout the myths and determine what is best for their businesses.


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