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As we enter an election year, Americans’ perceptions of economic health matter more than ever. Small business owners are often seen as a bellwether given how acutely they feel changes in policy, and understanding their concerns around inflation and the cost of doing business can shine a light on how voters will respond in November.
Many states and cities have recently raised or are in the process of raising their minimum wage, with some setting higher requirements than the federal minimum wage to match the local cost of living. New data from the Q1 2024 CNBC|SurveyMonkey Small Business Survey shows that the majority (61%) of small business owners support raising the minimum wage in their state, even while half (50%) believe it could make it difficult to afford the workers critical to their businesses.
The survey, fielded among more than 3,000 self-identified small business owners in the U.S. from January 22 to February 1, 2024, highlights an interesting paradox, with small business owners expressing both support and concern over an increase in minimum wage.
Differences among generations, industries, and politics
In recent months, some business owners have expressed support for minimum wage increases in the hopes that higher salaries in their communities will give potential customers more spending money, raise tax revenue that can be used to improve the local community, and increase employee satisfaction by meeting cost-of-living demands. Yet another faction of business owners worry that a wage hike will hurt profitability — especially for businesses where profits are already razor-thin — and reduce their ability to hire entry-level workers.
In the CNBC|SurveyMonkey study, the groups most likely to support minimum wage increases are business owners who are women, Black, under 45 years of age, Democrats, or work in the arts/entertainment or non-profit industry. Younger small business owners are also more likely to believe that a minimum wage increase will help their business.
The groups that are least likely to support minimum wage increases are men, over the age of 45, white, Republicans, and/or who work in manufacturing or agriculture.
Small business owners with unfilled job openings within the last three months at their company are split on their support for minimum wage increases: slightly more than half (54%) support increases, while under half (45%) oppose. Two-thirds (68%) also express concerns over their ability to hire new employees as a result of wage increases.
Widespread worry over the potential impact on their business
Overall, small business owners are split on whether a minimum wage hike will affect their ability to hire new employees. Half (50%) believe an increase will make it harder to hire, while just under half (49%) do not expect any impact. Notably, twice as many small business owners with unfilled job openings within the last three months believe that a higher minimum wage will mostly harm instead of help their business (51% vs. 25%). Even proponents of a minimum wage increase worry about its impact on their bottom line, with business owners who are women (45%), younger (58%), and Black (46%) expressing concerns about worker affordability despite being the groups most likely to support such policies.
Despite the overall support for increasing the minimum wage, small business owners seem uncertain about how that may impact their own businesses. Just one in five (19%) small business owners believe that a higher minimum wage will help their business, a striking stat considering nearly two-thirds (61%) support it. In fact, 38% believe that an increase would harm their business.
These conflicting feelings among small business owners showcase the nuanced nature of this discussion. For more than a decade, the Fight for $15 movement has advocated for higher minimum wage laws around the country, and many local communities are grappling with high costs of living. As more states and cities move toward a higher minimum wage, it will be interesting to watch how Main Street sentiment continues to evolve.