Increasing minimum wage has been a hot topic as of late. Shouldn’t employees be able to make a livable wage? It seems like the answer would be simple, but there’s a little more to think about than just whether or not people should make more money. What does increasing minimum wage mean to entrepreneurs and small business owners?

Minimum wage increase may just mean an increase in operational expenses to large corporations, but small businesses aren’t able to absorb costs as easily as a corporation. For some entrepreneurs, a substantial increase in payroll could mean that they need to lay off employees, or even worse, close their business altogether.

Some argue that a higher minimum wage is a greater investment in employees that could potentially lead to reduced turnover rates. However, businesses are not required to give raises to employees on their payroll that already make more that the minimum wage. Since only the lower-paid employees would be receiving a raise, higher-paid employees could feel like small businesses only giving raises to lower-paid employees isn’t fair. They may say that they deserve a raise, too. This assault on employee morale could actually do the opposite of retaining employees- it could make some employees want to leave their job. It costs a small business a ton of money to replace and train employees!

If a small businesses doesn’t have to lay off employees, then how else will they adapt to the higher overhead? Small businesses would have to raise their prices by as much as 20% to offset the higher payroll costs. Corporations may be able to eat costs more easily, but the fact that small businesses will have to increase their prices would mean that they can’t stay competitive. Lastly, small businesses in California employ over 6.4 million workers. Increasing the minimum wage could cost the state up to 700,000 jobs. Even if business won’t have to cut the number of employees on the payroll, they may have to cut the number of hours that employees work in order to keep costs under control.

We wrote California Senate President Pro Tempore Kevin de León and let him know how our members would be impacted by an increase in minimum wage. We went one step further and also contacted Representative Barbara Lee because we know that our members expect us to do our best to represent their opinions to the most influential people that can make a difference in this matter.