Business Groups Are Divided on Proposal to Raise Minimum Wage
While House Republicans thwart Democratic efforts to pass an increase in the minimum wage, their natural allies--business groups--are divided on the issue and seem much more willing to compromise.
The National Federation of Independent Businesses, the largest small-business organization in the nation, mounted aggressive opposition to a wage hike proposal that now appears stalled in Congress.
Jack Faris, president of the 600,000-member group, predicts that many marginal small companies would be forced out of business if the minimum wage is increased from $4.25 an hour.
“Small-business owners are standing on tiptoe at the deep end of the pool,” Faris said. “Another inch is going to drown them.”
But in contrast with the federation’s intense letter-writing, phone and fax campaign opposing a minimum wage hike at the federal level and in California, other small-business associations have kept a stunning silence on the issue. The National Assn. of Women Business Owners, the National Assn. for the Self-Employed and the American Franchisee Assn., among others, have taken no official position.
The reason is that, the federation’s claims notwithstanding, small-business owners are not monolithically opposed to a minimum wage increase. Many small-business groups say their members are split on the proposals. That is especially true in California, which has a high number of better-paying high-tech and women-owned businesses.
“For most small businesses, it’s not an issue because most pay more than minimum wage,” said Scott Hauge, who oversees legislative affairs for the 125,000-member California Small Business Assn.
“I hate to see small business portrayed as being on the bandwagon against a minimum wage increase,” Hauge added, “because it makes it seem like we’re all a bunch of hamburger flippers.”
Only about 5.3% of hourly paid workers, or 3.6 million nationwide, receive the $4.25 minimum wage, according to 1995 data from the federal Bureau of Labor Statistics. Although no data exist for workers paid by piece-rate or job, or who receive a salary, federal economists believe the same percentage holds, for a total of 6.6 million working at the minimum wage.
Several proposals to increase the minimum wage are on the table. At the federal level, Democrats on Thursday pledged to continue their fight for President Clinton’s proposal to increase the minimum wage 90 cents to $5.15 hourly. Meanwhile, House Republican leaders fended off an effort by moderate Republicans for a $1 increase. In California, meanwhile, a proposed ballot initiative that would boost pay to $5.75 an hour by 1998 is widely regarded as a shoe-in with voters.
Economists disagree about the extent to which a minimum wage increase would cost jobs or hurt businesses. For small-business owners, the question boils down to what industry they are operating in or their political views, advocates for small business say.
Small-business owners using higher-wage, specialized workers in California’s high-tech or consulting industries are likely to be indifferent to minimum wage issues, Hauge said.
But restaurant operators, small manufacturers and retail shop owners who rely on minimum wage workers are likely to strongly oppose increases, he said.
Yet even in those industries, business owners may start their workers at minimum wage but raise their pay relatively quickly, so that many small-business owners are already paying above the minimum wage, Hauge said.
Karen Caplan, president of the 500-member Los Angeles chapter of the National Assn. of Women Business Owners, said a January survey found her members to be somewhat divided on the issue, with 55% opposed to a minimum wage increase and 45% in favor.
The reason many women business owners favor a wage hike may be because they are more likely to run service or consulting businesses, for example, that employ higher-paid administrative and clerical workers rather than the low-skilled or nonskilled laborers found in industrial settings, Caplan said.
In addition, women business owners may view a minimum wage increase as a societal “healing process” and not simply as a bottom-line issue, she said.
That is also a consideration for ethnic or racial business associations, such as the 1,500-member Black Business Assn. and the 2,500-member Latin Business Assn., two Los Angeles-based organizations that support a minimum wage increase.
Frank Moran, head of the Latino group, said his members not only view the issue from a cost perspective but also with a keen sensitivity to the plight of industrial laborers, many of whom are Latinos.
But Moran said the group would like to see other measures that would make life easier for small businesses such as health-care reform and substitution of time off for overtime pay.
Likewise, the 327,000-member National Assn. for the Self Employed is as concerned about certain tax issues as the minimum wage, said association Vice President Ginny Beauchamp. Home-office tax deductions and a clearer definition of independent contractors rank as high as wage concerns, Beauchamp said.
The diversity of positions among small-business associations reflects past political divisions among the groups, small-business activists say.
The National Federation of Independent Businesses is a conservative organization that has consistently backed the Republican leadership, the organization notes. While other small-business groups sought to make the Small Business Administration a Cabinet-level agency during the 1986 White House Conference on Small Business, the federation sided with Republicans who wanted to kill the agency.
During last year’s White House Conference on Small Business, the federation opposed affirmative action while most other business associations supported it. The group “definitely has a Republican bent,” said Samuel Crawford, public policy director for the American Franchisee Assn.
Caplan of the women business owners group said the differences on the minimum wage issue reflect the variety of perspectives among small-business owners.
“Everyone doesn’t think alike,” she said.
