Boston University defines minimum wage as, “the lowest level of earnings for employees set by government legislation.” In general there are two fiscal and social arguments on the minimum wage. Supply side economists see a minimum wage as a overreaching burden placed on small businesses while demand side economists argue wages set too low will result in higher levels of poverty.
Small Business Employment
The minimum wage directly affects small businesses because a large amount of their earnings go directly to pay for operating expenses, such as equipment, supplies, lease or mortgage, credit lines, inventory, and employee wages and benefits. The single largest cost to small businesses are the latter; employee wages and benefits and are also one of the few costs that can be controlled. However, if a higher minimum wage is enacted, they must hire fewer employees or downsize to comply with the minimum wage law, which has a direct impact on unemployment rates.Click here to continue reading
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