VIEWPOINT: Mandated wage hikes would hurt small businesses

Small businesses in our state value their employees as much as their customers and the communities they support. They reward their employees for a job well done. These businesses know that if their business is to succeed it must start with their team working behind the cash register, helping customers, stocking shelves or cooking in the kitchen. For many employees, these are first jobs, an opportunity to gain valuable experience that will benefit them for the rest of their careers.

This opportunity is being threatened, however, through Initiated Measure 18, which mandates a 17 percent starting wage increase on small businesses. It doesn't stop at a one-time increase. It mandates a wage increase every single year – forever – even if South Dakota's economy or an individual business isn't doing well.

In other words, small businesses with small margins will have no control over setting wages, despite their size, performance of individual employees, how business is going or local economic conditions. The unintended consequences of a mandated wage increase every single year would hurt those it proposes to help. A significant increase in the minimum wage would force many small businesses to cut back in other areas in an effort to absorb the wage costs.

Cutting costs takes a variety of forms: Experienced workers might not get the raises they deserve as employers are forced to pay entry-level and unskilled workers more each year. Many employers would be forced to eliminate part-time jobs and combine those duties with those of higher skilled workers. Prices will go up for all families on many goods and services, including essentials such as food and clothing.

Whichever way businesses choose to cut costs, the result means fewer opportunities for South Dakota workers. And a wage hike is of little help when you can't get a job in the first place. We need to focus on expanding job opportunities and not take steps that hurt employers' ability to sustain jobs as well as giving back to their community.

The Bureau of Labor Statistics estimates that 12,000 South Dakotans earn minimum wage or less, which equates to 3 percent of our state's workforce. Unfortunately, the overwhelming majority of economic research confirms that mandated wage hikes reduce job opportunities. Even the South Dakota Budget and Policy Institute acknowledged in a Pierre Capital Journal report Sept. 29 that hundreds of jobs would be lost in the state if this proposal is approved.

It seems like a popular message to increase the minimum wage. The reality is that South Dakota's small businesses know that with the second-lowest unemployment rate in the nation, they have to pay a competitive wage in a tight marketplace if they hope to attract and retain good employees.

Minimum wage jobs have always served as the first rung on the career ladder, not as careers in and of themselves. These positions teach personal responsibility, teamwork, discipline and accountability – marketable skills that allow the vast majority to earn a raise within their first year.

Mandating annual wage increases based on the economies of other states is just wrong. Small businesses should have the ability the give raises to their employees who truly earn them. Our economy is better when we all compete and are rewarded for ability and effort, without arbitrary and punitive wage mandates. Mandating wage increases every year hurts small businesses and the people they are supposed to help.

Raising the minimum wage might sound like a good idea, but Initiated Measure 18 goes too far. Vote no on Initiated Measure 18.

Shawn Lyons is executive director of the South Dakota Retailers Association

slyons@sdra.org