Wells Fargo survey: small-business owners divided on increasing the minimum wage

Small-business owners are divided on whether the national minimum wage should be increased. That’s according to the most-recent Wells Fargo/Gallup Small Business Index.

In the survey, conducted Oct. 23-29, small-business owners were split between those who approve (47 percent) and those who disapprove (50 percent) of a law raising the national minimum wage to $9.50 an hour. This contrasts with a separate recent Gallup poll of the American public, in which three-fourths of respondents said they supported hiking the minimum pay rate from the current $7.25 to $9 per hour.

In the Wells Fargo/Gallup Small Business Index, 60 percent of survey respondents said increasing the minimum wage would hurt small-business owners. About 30 percent reported that an increase in the minimum wage would have little effect on most small-business owners. Yet when asked how approval of minimum-wage legislation would affect their businesses, about 60 percent of small-company proprietors said they would not reduce their current workforce or employee benefits.

The survey results follow recent state and federal-government legislation and proposals on the minimum wage, including the recent passage of a new law in New Jersey that indexes future increases in the minimum wage to inflation, according to Wells Fargo. In September, the California state legislature voted to raise the state minimum wage to $10 an hour by 2016. A proposal to raise the minimum wage also is being considered in the U.S. Senate.

Small-business optimism

The Wells Fargo/Gallup Small Business Index remained mostly unchanged over the past several months, and is currently at a positive 24 (+24), compared with the third-quarter index score of positive 25 (+25). While it’s the second highest score in the last five years, the index score remains below pre-recession levels, according to Wells Fargo.

When business owners were asked to identify the most important challenge facing their businesses, several concerns rose to the top of the list. In the fourth-quarter survey, business owners once again said their top concern was finding new business, yet this concern fell from 28 percent to 13 percent of responses, according to the survey results. Other top concerns include the economy (12 percent), health care (11 percent), and government (11 percent). The number of business owners identifying government as the most important challenge was much higher this quarter than in the third quarter, the survey found.

“Small business owners are still in wait-and-see mode,” Doug Case, Wells Fargo small-business segment manager, said in a news release. “As they plan for next year, they are looking for more economic stability.”

The survey also found that nearly one in four small-business owners expect to have a better operating environment and are more optimistic about their business’s future in 2014. Half of business owners surveyed said they expect the operating environment next year to be about the same as this year, according to the survey.

Since August 2003, the Wells Fargo/Gallup Small Business Index has queried small-business owners on current and future perceptions of their firm’s financial situation. The index consists of two components: 1) Owners’ ratings of the current situation of their business, and, 2) Owners’ ratings of how they expect their business to perform over the next 12 months. Results are based on telephone interviews with 605 small-business owners in all 50 states, conducted October 23-29, according to Wells Fargo.

For more survey results, visit https://wellsfargobusinessinsights.com/research/small-business-index