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As support for $ 15 minimum wage gains momentum, Main Street fears now is not the right time

As small business owners applaud President Joe Biden’s plans to direct more aid to a main street that has been ravaged by the pandemic, they are also debating another of his commitments – raising the federal minimum wage to 15 $ per hour.

Workers’ rights groups applaud the move, but advocates for America’s smaller businesses warn that such an increase could block an already difficult economic recovery on the way back to stability after the health crisis.

Biden’s plans would more than double the current federal minimum wage of $ 7.25 an hour, which has not budged since 2009, despite repeated efforts by Democrats to raise the wages of low-wage workers.

A 2019 Congressional Budget Office report predicted that gradually raising the federal minimum wage to $ 15 an hour by 2025 would increase the wages of 17 million workers, but could also cost 1.3 million workers their jobs. . In addition, it would lift 1.3 million people above the poverty line. While the federal minimum wage has stagnated for more than a decade, more than half of the nation’s states have minimum wages above the federal floor, and demand for $ 15 grows in states and municipalities as the local government is taking action.

“We cannot and will not return to the status quo once the pandemic is over because the status quo does not work for us,” union member Rita Blalock said in a statement from advocacy group Fight for $ 15. The group staged a strike earlier this month to demand higher wages in the fast food industry, continuing a multi-year effort to extend workers’ protections and wages.

Economic recovery for small businesses will be a sustained challenge, even with stimulus measures set to boost consumer spending. Opportunity Insights researchers predict that the number of small businesses in America fell nearly 30% last year.

A number of industry groups are voicing their concerns. The National Restaurant Association said Biden’s move could cause “more harm than good” to the industry as a whole. The International Franchise Association also warned that the increase could be counterproductive for the time being, Matt Haller, IFA senior vice president of government relations, saying: “The obligation to more than double the wages of some workers will hurt struggling businesses and likely slow the recovery. “

The National Federation of Independent Business advocacy group echoed this sentiment, saying small businesses would suffer disproportionate harm.

“We are concerned that elements of this plan will hurt the companies that have borne the lion’s share of the pain of the pandemic,” said Kevin Kuhlman, vice president of federal government relations at the NFIB, in a statement. “Big business may be okay with a dramatic increase in the federal minimum wage and paid vacation mandates as they thrived during the pandemic, but small businesses know these policies will make them even harder to compete with their biggest competitors.” . “

One example is Target, which said on Monday it would spend $ 200 million to give its employees another round of bonuses. The discount retailer accelerated plans to increase his starting salary to $ 15 an hour in July.

Small business owners like Patrick Guay are weighing what the hike could mean if it removes legislative hurdles and becomes a reality. Guay owns four Mooyah restaurants in Massachusetts and Connecticut, where minimum wages are $ 13.50 and $ 12, respectively. It typically starts young workers at minimum wage and pays older workers with more experience who can support families higher wages. If the federal minimum reaches $ 15, he will have to adjust the salary accordingly in all areas.

“Every year when the minimum wage goes up, you also have to re-evaluate your existing employees, to create a differentiation in their wages. This is a big concern, you have hourly employees who are about to do the same as your salaried general managers in restaurants, ”Guay said. “I’m not sure it’s fair to put everything on the owner of the small business and then ask ourselves to decide how much we want to pass on to our customers.”

While small business owners may voice concerns about higher wages, the vast majority of Americans, around 72%, support the idea of ​​raising the minimum wage, according to an Ipsos survey of 1,114 adults in August. , on behalf of Public Agenda and USA Today. . Some proponents say that raising workers ‘wages means more money in workers’ pockets, which could benefit small businesses and the economy as a whole.

Small business owner Julia Knight pays more than the minimum wage at her namesake company, Julia Knight Collection, in Minneapolis. She has three employees and more than a dozen contractors, and says she never pays less than $ 20 an hour because the expertise she needs demands a higher salary. Its employees also benefit from health coverage. And that has remained true even as his business, which sells high-end tableware, has taken a hit due to the pandemic and the economic recession.

“I just don’t like the people who work for me worrying about how they’re going to take care of themselves,” Knight said.

She added that to those who say $ 15 an hour is too high, she would say this, “Did you look these people in the eye and say, ‘You have to raise a family on $ 15? Of time ” ? I do not do it. see how it works. “

-CNBC Betsy Spring contributed to this report.

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