How Will Raising the Minimum Wage  

Affect Small Business?

In the State of the Union address, President Obama asked Congress to raise the federal minimum wage to $10.10 from the current $7.25 per hour. By Executive Order, he also immediately raised the hourly minimum rate for federal employees and employees of companies contracted to do business with federal government.While the federal government has not increased the minimum wage since July of 2009, this would represent a 39% increase for all covered, nonexempt workers in states that set their minimum wage to the federal standard.

As of January 1, 2014, twenty-one states and the District of Columbia have minimum wages that exceed the current federal minimum. However, none of them have a $10.10 minimum wage. For instance, the state of Washington has the highest minimum wage in the nation at $9.32 followed by Oregon at $9.10.

Illinois' minimum wage is $8.25 so if a federal minimum wage bill is enacted, it would mean a 22.4% increase to a business' payroll expenses.

Politicians and economists are split over whether raising the minimum wage will help or hurt the economy. Many economists feel that raising incomes will increase employee morale and stimulate spending of the lower class. Others say there could be a negative impact on those looking to enter the job market and the small businesses already struggling that employ minimum wage workers. Another concern is that jobs will be lost if employers cannot afford the burden of such an increase and may eliminate staff, reduce hours or cut benefits to offset the increase.

Most minimum wage jobs are provided by small businesses. Approximately 1.57 million Americans (2.1%) of the hourly workforce earned minimum wage in 2012, according to the Bureau of Labor Statistics. More than 60% of those workers were employed in the retail, hospitality and food service industries

In my opinion, increasing the federal minimum wage has some merit. The federal minimum wage has not increased in almost five years, while the cost of living has continued to rise. A smaller increase would help those working for low wages without putting a tremendous burden on those who employ them.

Should the law pass, employers who currently pay workers below the proposed new rate will have to adjust by either raising prices, cutting employee hours, reducing work force or other employee benefits, or any combination of all three.

However you believe changes in the minimum wage will affect employers and employees; there is no doubt that, along with the Affordable Care Act, business owners will need to make significant changes to their operations to maintain profitability.

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Not Enough Time to Manage Your Day?

As small business owners spread themselves ever thinner -- tackling from three to six different roles, on average -- effective time management becomes harder and harder to achieve. 

A new study and infographic by Mavenlink, for example, shows that one in four small business owners believe each productive hour in a day is worth upwards of $500.

Other surveys have pointed to the increased burden placed on these business owners in recent years, including one by Sage Small Business that found small business owners are not only working harder than they were five years ago, they're also working longer hours. Another survey by Citibank found that owners are sacrificing their pay as well as family or vacation time, in addition to working those longer hours.

So how can small business owners make the most of their time? Click on the graphic to the left and look at the statistics and tips -- including the incorporation of online platforms and proper prioritizing.

In upcoming issues, we will be addressing ways to make more time for your business and yourself.