I was 15½ when I got my first job as a retail store clerk and earned the minimum wage. Like many teens back then, I used my paychecks for more clothes and hanging out with my friends.
Nowadays, the retail clerk doing the same job I did decades ago works to feed a family or purchase expensive medications. So I can certainly empathize with those who want the minimum wage increased to $15 an hour.
Nonetheless, I don’t think politicians and policymakers really understand the impact this will have on small businesses (according to Fact Check.Org, nearly 80 percent of all U.S. small businesses employ fewer than 10 people).
I see these consequences of doubling the federal minimum wage: The employee now earning $10 an hour will reasonably expect $20 an hour. The employer liability for payroll taxes will also double. Remember that FICA is 7.65 percent of every dollar paid, the minimum unemployment tax in Massachusetts is 2.8 percent per dollar paid and workers compensation insurance premiums are typically based on the total quarterly wages paid.
Last Sunday, I watched two policy wonks debate the issue and both admitted they’ve never personally written paychecks. Hence, they’ve never had to borrow or use personal savings to fund a payroll … a truly stressful experience that I and the Easthampton letter-writer (“Writing payroll checks a good political prerequisite”) know all too well.
Moreover, if the business owner sets money aside to ensure funds are available to make payroll in slow months or when receivables don’t come in, that money will be taxed as “profits.” Although most proposals call for a gradual implementation of a $15 minimum wage, please understand the impact will be catastrophic on small businesses that can’t just raise prices. And sadly, for our economy, more entrepreneurs will steer away from businesses that require employees.
Denise Presley
South Hadley