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A minimum-wage ho-hum

Most small firms say a hike wouldn't affect costs much

Published: Wednesday, Dec. 27 2006 12:00 a.m. MST

WASHINGTON — A rise in the U.S. minimum wage would have little effect on small-business labor costs, according to a survey of small-business owners released Tuesday by Discover Financial Services.

According to Discover, 70 percent of the 1,000 small-business owners it surveyed said an increase in the minimum wage to $7.25 an hour would have no effect on labor costs. The minimum wage is currently $5.15 an hour.

"This most likely reflects that many small-business owners pay more than the minimum wage to their employees," said Sastry Rachakonda, director of Discover Business Card, in a release.

The survey includes companies with five or fewer employees.

While a higher minimum wage wouldn't affect labor costs much, the survey found that 29 percent of small business owners thought it would affect the prices of products and services they use, Rachakonda said.

Congressional Democrats have made a higher minimum wage a top agenda item when they take control of the legislative branch next month. President George W. Bush has signaled his support but said any increase needs to be paired with tax measures to protect small business.

The Discover survey found that only 9 percent of small-business owners plan to give higher wage increases in 2007 than they did in 2006, with 61 percent planning to give the same raise.

That may prove a disappointment to their employees. When Discover surveyed small-business employees it found that many expect a bigger raise next year.

The national random survey of 1,000 small-business owners was conducted by Rasmussen Reports, an independent research firm.

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