South Dakota small business owners and the National Federation of Independent Business (NFIB) in South Dakota are cautioning lawmakers about the potential negative effects of a proposed increase to a $15 minimum wage. According to a recent NFIB survey, 89% of employers who would be negatively affected by the wage increase reported they would face reduced earnings, while 87% indicated they would need to raise prices.
Ruth Hiles, owner of Almar Inc., a tax preparation and bookkeeping business in Huron, expressed concern over the proposed wage hike. She stated, “As a small business owner, I would have to raise my prices to cover the additional payroll costs… A $15 per hour minimum wage is beyond unreasonable for most small business owners.” Hiles highlighted that due to pandemic-related challenges and government-mandated restrictions, her business has struggled. She fears passing on higher costs could ultimately lead to closure.
Lindsey Riter-Rapp, NFIB State Director in South Dakota, echoed these concerns. “The threat of a $15 minimum wage would be devastating to 75% of our small business owners here in South Dakota,” she said. Riter-Rapp noted that nearly 90% of small businesses might need to increase their prices if such legislation passes.
The survey found that most small business owners already pay above the current minimum wage. Four out of five employers have no full-time or part-time employees earning at or below the current minimum wage. Additionally, two-thirds of small employers pay at least one employee less than $15 per hour.
An increase in the federal minimum wage could impact almost three-fourths of all small employers negatively. Of those potentially affected, 58% might reduce their workforce size, while 60% may cut employee hours. Furthermore, 67% might leave positions unfilled, and 56% could opt for more part-time staff.
This report marks NFIB’s 15th Small Business COVID-19 survey evaluating the pandemic’s impact on operations and economic conditions for small businesses.
