Increasing the Federal Minimum Wage: An Implications Side-Bar for "Mom and Pop" Employers

James S. Moore

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DOI: 10.2190/CN.32.1.c

Abstract

This article examines the implications of increasing the federal minimum wage in the labor market typically frequented by the entrepreneur and small business owner/operator. As employers, these firms are often heavily dependent upon unskilled/inexperienced workers to provide their goods and services in relatively competitive markets. When confronted with mandated increases in their wage expenses, such small businesses have limited flexibility in adapting to these interventions. The long-run implications of such wage floors will likely be quite distinct from their near-term counterparts. The bottom-line for the "mom and pop" employer may simply be that, unless the added labor expense can be passed on to the firm's customers, the ultimate result of the minimum wage increase is a reluctant curtailment of unskilled labor hours hired and, consequently, either the owner/operator spends more time working in the business or the scale of the operation contracts.

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This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 United States License.