Minimum wage divides opinion among US small-business owners

Owners of small businesses in the US are evenly split on whether the federal minimum wage should be raised, according to a survey by the Wall Street Journal and Vistage International.

In their latest monthly survey of small-business CEOs, 49% were in favor of raising the minimum rate, with the same number opposed. Three-quarters of those surveyed reported that they did not employ minimum-wage workers.

The minimum wage has become a major political issue in the US, with President Barack Obama advocating a raise to $10.10 an hour.

Hillary Clinton, who is seeking the Democratic Party’s candidacy for the presidential election in 2016, recently endorsed a campaign by low-paid workers to raise the minimum wage to $15. The $15 rate has also been endorsed by two of Clinton’s Democratic rivals, Martin O’Malley and Bernie Sanders.

The current federal minimum wage in the US is $7.25 an hour, although over half of the country’s 50 states have enforced higher rates. Los Angeles City Council recently raised the city’s minimum wage to $15, becoming the largest American city to do so.

The economic impacts of minimum wage legislation have come under analysis in several IZA World of Labor articles. Our author David Neumark argues that introducing or raising minimum wages reduces the number of jobs available to lower-skilled workers, and that minimum wages do not necessarily benefit the poorest households.

Daniel Hamermesh similarly suggests that minimum wages have small negative effects on employment, albeit while raising earnings for those low-wage workers who remain employed.

Meanwhile, Richard Burkhauser argues that minimum wages are not effective in reducing poverty, and earned income tax credits are a better alternative.

Read more on this story at the Wall Street Journal.

Related articles:
Do labor costs affect companies' demand for labor? by Daniel S. Hamermesh
Employment effects of minimum wages, by David Neumark
The minimum wage versus the earned income tax credit for reducing poverty by Richard V. Burkhauser