Fox Dubiously Claims Minimum Wage Increase Harms Small Businesses

Fox News misleadingly claimed that an increase in the minimum wage would harm small businesses. In fact, data show that small businesses in states with a higher minimum wage experience better economic performance and job growth.

Fox Claims Increasing The Minimum Wage Could Harm Small Businesses

Gretchen Carlson: Higher Minimum Wage May Be “Bad For Small Businesses.” On Fox & Friends the morning after the president's State of the Union address, co-host Gretchen Carlson claimed "[Obama] also wants to increase minimum wage, and of course, that would be great for people who are working at those jobs, but possibly bad for small businesses who have to pay higher wages." [Fox News, Fox & Friends, 2/13/13] 

But Minimum Wage Increases Don't Harm Small Businesses

Center For American Progress: Data Show States With Increased Minimum Wage Had Higher Small Business Job Growth. A 2006 study by the Center for American Progress and Policy Matters Ohio compared small business performance between states using the federal minimum wage and states that had a higher minimum wage, and found that employment in small businesses grew more in states with a higher minimum wage. [Center for American Progress, May 2006]

Fiscal Policy Institute: “Indicators Of Economic Performance Were Consistently Better” In Higher Minimum Wage States For Small Business Job Growth. According to the Fiscal Policy Institute:

In examining state-level small business job growth, the best government data available permits a comparison of 1998 and 2003; the latter is the most recent year for which the data are available. For the 10 states and the District of Columbia that had set their minimum wages above the federal level for most of this period, indicators of economic performance were consistently better than for the other 40 states where the federal minimum wage of $5.15 an hour prevailed. [Fiscal Policy Institute, 3/30/06]

NYTimes: Small Business Owners In A State With Higher Minimum Wage “Have Prospered Far Beyond Their Expectations.” According to The New York Times:

Just eight miles separate this town on the Washington side of the state border from Post Falls on the Idaho side. But the towns are nearly $3 an hour apart in the required minimum wage. Washington pays the highest in the nation, just under $8 an hour, and Idaho has among the lowest, matching 21 states that have not raised the hourly wage beyond the federal minimum of $5.15.

Nearly a decade ago, when voters in Washington approved a measure that would give the state's lowest-paid workers a raise nearly every year, many business leaders predicted that small towns on this side of the state line would suffer.

But instead of shriveling up, small-business owners in Washington say they have prospered far beyond their expectations. In fact, as a significant increase in the national minimum wage heads toward law, businesses here at the dividing line between two economies -- a real-life laboratory for the debate -- have found that raising prices to compensate for higher wages does not necessarily lead to losses in jobs and profits.

Idaho teenagers cross the state line to work in fast-food restaurants in Washington, where the minimum wage is 54 percent higher. That has forced businesses in Idaho to raise their wages to compete.

Business owners say they have had to increase prices somewhat to keep up. But both states are among the nation's leaders in the growth of jobs and personal income, suggesting that an increase in the minimum wage has not hurt the overall economy.

“We're paying the highest wage we've ever had to pay, and our business is still up more than 11 percent over last year,” said Tom Singleton, who manages a Papa Murphy's takeout pizza store here, with 13 employees. [The New York Times1/11/07]

 For more on Fox's baseless attacks on minimum wage, click here and here.