The small business outlook has declined this past March, and some believe that the 7.7 decline over the last year is an indication of a possible recession. Although some small businesses are blaming the increase in minimum wage the culprit for this less than bright outlook, the United States Department of Labor disagrees.
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As Minimum Wage Marches Toward $15, Small Businesses Adapt
In the aftermath of California and New York becoming the first states to raise the statewide minimum wage to $15, some small businesses with hourly workers are rethinking how they can absorb the increase.
The owners of Dog Haus, a chain of about 20 franchise restaurants in the West, may have customers pick up their meals at the counters in two company-owned stores instead of using servers to carry food to tables. The Pasadena, California-based company is also looking at hiring more experienced workers who can shoulder more responsibilities than entry-level staffers who earn minimum wage. For example, a cashier might now take on some administrative tasks. That way, Dog Haus could hire fewer people.
“We’ve known this has been coming for a while, and we’ve been preparing for it,” co-owner Andre Vener says.
State minimum wages have been rising the past few years as pro-labor groups including unions call for higher pay for workers, especially those at fast-food restaurants. That’s forcing small businesses that are more vulnerable to labor cost increases than large companies to reassess their operations. Some are thinking of cutting staff, and others are raising prices.
NFIB: Small-Business Gauge Is Flashing Recession Warning
Optimism among small-business owners slipped 0.3 point in March to a two-year low of 92.6, and the 7.7-point decline in the index over the last 15 months is a flashing warning signal of a possible recession, the National Federation of Independent Business said.
April’s Index of Small Business Optimism could determine whether a recession alarm should be rung, according to William Dunkelberg, NFIB chief economist.
Regulations were small firms’ top concern, with 21% listing it as their primary worry, followed by 20% of respondents who cited taxes as their main worry.
New York and California are two states that have passed gradual raises of their minimum wage to $15 per hour — moves hailed by unions but criticized by small businesses.
Supporters of the wage hikes have targeted blue-chip companies such as McDonald’s (MCD) andWal-Mart (WMT), but opponents argue that the pay raises will hurt small firms and their workers more.
Small Business Owners In Ohio Cautious On Economy
Ohio’s small- and mid-sized business owners are turning more cautious about the economy, both locally and nationally, as they fret about the presidential campaign and the stock market, according to a PNC Bank survey.
The survey found that 41 percent of business owners are pessimistic about the U.S. economy, about the same as in the fall survey, but up from 31 percent last spring. When it comes to their local economy, 35 percent are pessimistic, up from 26 percent in the fall.
“There was definitely more pessimism about economic conditions,” said Mekael Teshome, a PNC economist. “But Ohio business owners’ sentiment about their own business is remarkably quite stable.”
Pittsburgh-based PNC conducted the survey from Jan. 21 through March 8. At the time, there were worries about the economy slowing or even slipping into a recession and the stock market was tumbling. Also, 61 percent said they were not satisfied that the presidential candidates were addressing the key issues for business.
