Why does NFIB oppose raising the minimum wage?

This is a question I often hear from people who don’t own small businesses and occasionally get from an entrepreneur who wonders why we take such a position.

Sometimes they follow with another question: “Why don’t you want to help families who are struggling?”

We do want to help families and any who are struggling financially. But simply raising the minimum wage is not an effective way to end poverty. That’s not just our opinion but a reality backed by official U.S. government research.

According to U.S. Department of Labor statistics, half of those who earn the minimum wage are under 26 and aren’t the main source of family income. [See EPI study on number of workers dependent on minimum wage]

But politicians have seized this issue, clouding the true impact it could have on our economy. President Obama has made it a top agenda item.

In his recent State of the Union, he said he would ignore Congress and use “Executive Power” to raise base wages for some federal contractors’ employees. Good politics, but bad news for those working single moms he often touts as examples.

The first question concerned people should ask is “What will happen when that single mom’s employer is forced to make cuts to keep up with rising wages?”

And the second question should be: “Where will her children find their first jobs when they grow up?”

Answer to Question No. 1: Raising the cost of labor forces employers to use less of it. One only has to look at supermarket self-checkout lines to see that technology is steadily eliminating low-skill jobs.

Answer to Question No. 2: Creating jobs where future generations can one day learn the skills necessary to advance in the job market, build careers and stay ahead of technological change is the best benefit they could receive.

Artificially hiking wages ignores the key problem. It doesn’t help many who have jobs: 95 percent of hourly-paid employees already earn above the minimum and worse, it will increase unemployment and prevent businesses from hiring.

Those questioning NFIB’s opposition to government-mandated wage increases should ask themselves: “If I were a small-business owner facing labor costs that account for 70 percent to 80 percent of my operating expenses–costs that I’m unable to absorb–which option would I choose: Raise prices, lay off employees or close my business?”

Any of those options is a dead end for both small businesses and employees.Increasing the minimum wage will make things worse for families, for small-business owners and our economy overall.

It’s important to ask the right questions.

For more information on minimum wage and the impact on small business, visit: http://www.nfib.com/article/raising-the-federal-minimum-wage-240/


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About Dan Danner

Donald A. "Dan" Danner was named president and CEO of the National Federation of Independent Business, the nation's leading small business association, in February, 2009. Danner is only the sixth president in the history of the organization. Before rising to the top spot, Danner was executive vice president, overseeing NFIB's federal and state public policy and political activities as well as the organization's three 501 (c) 3 operations: the Research Foundation, Small Business Legal Center and the Young Entrepreneur Foundation. He came to NFIB in 1993 as vice president of the NFIB Education Foundation (now known as the Young Entrepreneur Foundation) and was named vice president of federal public policy in 1995. Previously, he was chief of staff to the U.S. Secretary of Commerce. Danner also worked in the White House Office of Public Liaison, where he was special assistant to the president and deputy director of the department. Before joining the White House staff, Danner was an executive with Armco Inc., a steel manufacturing company. He held leadership positions in sales and marketing, as well as state and federal lobbying on issues such as energy, environment, taxes and trade. He also served four years as vice president of federal relations at George Mason University. A native of Middletown, Ohio, Danner holds an MBA degree from Xavier University and an electrical engineering degree from Purdue University.
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2 Responses to Why does NFIB oppose raising the minimum wage?

  1. carolinmd says:

    It is a pleasure to hear the voice of reason after trying to explain this simple reality to the low informed voters who have been indoctrinated by the main stream media. They can’t believe that any decent human being could be against the people making a “Living Wage”.
    If they ever owned a small business or even worked for a small business, that question would never come up.
    There is no accurate rational answer that would allow for increase to be passed. There is no place in our Constitution that even hints at such an infringement upon the liberty of the employer holds him responsible for the financial well being of any least of all, all of his employees.

  2. John Natoli says:

    This problem cannot be solved because the origin of the minimum wage question goes down much deeper into problems that have to do with the very nature of our economic system and thus are untouchable, therefor we will forever squabble over surface issues that never actually make any difference. If we were willing to address those deeper issues then we might get somewhere.

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