Debate Over President Obama's Orders to Raise the Minimum Wage

544 Words3 Pages
Source Summary: Minimum Wage In his 2014 State of the Union address, President Obama announced his intention to sign an executive order raising the minimum wage of federal contractors to $10.10 per hour. This move reflects the minimum wage increases that went into effect in many states at the beginning of the year, as well as similar measures under consideration in other states and the federal government. While many activists welcomed this news, a Feb 5th New York Times article examines the possible negative effect of increased minimum wage owners on small businesses, weighed against the advantages predicted by proponents of the laws. On January 1st, New Jersey increased the minimum wage from $7.25 to $8.25 per hour, a mandatory increase which Dolores Riley, owner of a small child care business, fears may put her out of business. Even though most of her employees are already paid more than the minimum, she says she will have to raise pay for all employees “to maintain the current pay structure.” The Times article reports that this apparently small increase will actually add between $10,000 to $15,000 to her annual operating costs. The business, already squeezed by the economic downturn, cannot support that without laying off employees or raising prices, which Riley says she cannot do without losing a significant portion of her customer base. Another example is Charlene Conway, who owns two family recreation facilities in Massachusetts. Her company, with revenues of less than half a million dollars annually, also cannot support the increased salaries she will have to pay. In the past, she has stopped hiring people under 16, who she says are not worth the $9 per hour. An unintended side effect of the minimum wage increase, she says, is that it “eliminates the opportunity for young people to get started in the work force” (Perman). Her only option as a business owner if minimum wages reach $10 per hour would be to reduce her staff down to ten and find ways to increase their productivity. The article also quotes some small-business owners who find those concerns to be “short-sighted.” Amanda Rothschild, the owner of a small café in Baltimore, claims that paying her employees well actually saves her money on training and waste because it reduces employee turnover. Her employee turnover rate is 22%, in an industry where 50-75% is the norm. Unlike the other business owners in question, Rothschild’s café has seen increases in revenues over the past few years, a trend she expects to continue.

More about Debate Over President Obama's Orders to Raise the Minimum Wage

Open Document