October 1, 2001

Washington, D.C.-Responding to reports that Congress may include a minimum wage hike in an upcoming economic stimulus package, the Small Business Survival Committee (SBSC) warned today that a minimum wage increase would do the economy more harm than good.

"The point of an economic stimulus package is to help the economy, not harm it.  Raising the minimum wage would be the final blow for many small businesses that are barely hanging on as it is," said SBSC president Darrell McKigney. "Make no mistake, a minimum wage increase would be bad for the economy and make a recession more likely.  It would increase costs for America's small business owners, and hurt young, low-skilled workers who might be priced out of the labor market."

SBSC chief economist Raymond J. Keating noted: "Indeed, the ills of the minimum wage are quite numerous, and have been extensively documented by economists over the years.  Small enterprises would be hit hardest by the increased costs due to a minimum wage increase.  Those higher costs translate into lost jobs, fewer work hours, reduced compensation for other employees, canceling plans for expansion, cutting benefits or even having to close the business."

Keating concluded: "In the current economic environment-indeed, as we face the strong possibility of a recession-Congress must to move ahead with a pro-growth package of policy measures.  These should be focused on reducing governmental costs such as the high taxes imposed on entrepreneurs and businesses, so as to boost incentives for investing and risk taking.  A minimum wage increase would accomplish the exact opposite."

For more information, please contact SBSC at 202-785-0238, or visit SBSC's website at www.sbsc.org.  SBSC is a nonprofit, nonpartisan small business advocacy group headquartered in Washington, D.C.