Many assume that the raise in minimum wage on July 24th from $6.55 and hour to $7.25 an hour only effects those making minimum wage and is working to get them above the poverty level. While yes those making minimum wage now get an exciting $121.00 per month raise, all other workers and small business owners have an even more exaggerated negative impact with the $.70 per hour increase.

As a small business owner, a raise in minimum wage can have impacts on your business’s the bottom line and beyond. First, lets address the obvious effects of the raise. For those businesses such as food service, lawn care, child care and the like that are dependent on minimum wage workers, the impact is instantaneous, payroll goes up. Or worse than that for some employees, they lose their jobs and their work is re-distributed.

Of course these increases will be most prevalent in the areas of farming, food service, guest services, etc., and minimum wage reliant fields, but it doesn’t stop there. While not all businesses will see an actual bottom line increase, many will use the minimum wage increase a reason to raise prices. So overall the increase in spending dollars received through minimum wage will be diminished on price increases from businesses. It is like chasing your tail, you can go round and round and still never get what you wanted.

Next we have an issue that effects every employee making more than minimum wage. In this economy where employees are possibly not getting merit raises, let alone Cost of Living Raises, to receive a negative impact on their spending dollar by minimum wage being raised will probably have negative impacts on your business most likely in morale. You may very well pay your employees an excellent wage, but are you going to give all of them a $.70 per hour raise on July 24th? Probably not, so in effect you are decreasing their wage by $.70 per hour, that is what they just lost because the prices of goods will soon be going up.

So while there is no right answer, shouldn’t we let the market, ie the business owners, determine what their employees should be making. By forcing employers to pay more, are we really helping those who need it? Most businesses that employ good practices, including a fair wage, stay in business and retain good employees. It is the responsibility of the business owner to treat their employees fairly or they will lose them to the competition, if the market supports it. Right now with the highest unemployment in history and and 11% increase in minimum wage, all we are doing is setting more people up to lose the meager jobs they have and the ones who keep minimum wage jobs don’t gain any spending power and every other person who doesn’t get a $.70 per hour raise loses out too.