Obama to Business Owners: Time to Raise Your Wages
President Obama's State of the Union address had a few points that will be of interest to small-business owners.
President Obama's State of the Union Address on Tuesday night didn't devote much time to small business. Rather, the president spent much of his 65-minute speech talking about issues related to income inequality and his plans for executive action.
He did, however, have one directive for business owners: Give your employees a raise.
President Obama pressed Congress to increase the federal minimum wage, which is currently $7.25 an hour. He announced plans to issue an executive order that will require federal contract workers to be paid at least $10.10 an hour.
But he also stressed that business owners can take the lead by voluntarily raising their employees' wages. To make his point, he invited John Sorrano and Nick Chute, an owner and employee of Punch Pizza, a Minneapolis-based pizza chain. Punch announced in December that it would start paying its 300 employees at least $10 an hour. (Punch had been paying employees wages as low as $7.50 an hour and the move meant that 90 percent of its employees got raises, according to the Minneapolis-St. Paul Business Journal.)
"Tonight, I ask more of America's business leaders to follow John's lead and do what you can to raise your employees' wages," Obama said, adding: "Profitable corporations like Costco see higher wages as the smart way to boost productivity and reduce turnover."
Obama's call to raise wages—either voluntarily or by law—likely rubbed many business owners the wrong way, however.
A new survey by CNNMoney and Manta found that 49 percent of small-business owners (those with 100 or fewer employees) oppose raising the minimum wage to $10.10 an hour, while 44 percent support it. Seven percent said they were unsure.
Interestingly, 95 percent of business owners surveyed said that $7.25 an hour is not a livable wage and only 7 percent reported currently paying any of their employees the minimum wage. About 20 percent said they do, however, currently pay at least some of their employees between $7.25 and $10.10 an hour—meaning they would be affected by a federal minimum wage increase.
The survey also looked at how businesses would react if they were forced to raise the minimum wage: 26 percent said raising the minimum wage to $10.10 would cause them to reduce employees' hours and 32 percent said they would raise their prices.
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