Something came to me the other day, and I really haven’t heard anyone else talking about it, nor have I seen any mention of it in the media.  July 14th (I think) 2009, the minimum wage will be increased to $7.25 per hour.  On its face, this is all well and good for those who are not making said $7.25; the problem comes when you look at small businesses who are already taking a hit from the recession.

Labor Costs Increasing for Small Business

Businesses that rely on low cost labor will be taking a hit because of the minimum wage increase.  In a normal economy, the increased labor cost would just be passed along to the customer and everyone goes along their way.  Enter the recession.  Individuals and businesses are not spending money as normal, so businesses are having to cut prices to get business into the door.  Decreased income means costs have to be cut somewhere; cost cutting goes across the board.

I have heard people say that the Recession is a good excuse for business to release more experienced workers, ie more expensive workers, and hire newer, cheaper workers.  While I don’t have any employees in my business, I will go on the record to say in a normal business, this is not true.  While businesses may be cutting workers due to the Recession, they are cutting the non-productive workers, not the more experienced.  While cutting non-productive workers, businesses are working their remaining workers harder, forcing them to become even more productive.

Will the Recession End in 2009?

While the talking heads of the media say that the Recession should start to be on its way out by the end of 2009, I disagree.  The US government is spending money like it’s water, pouring it into GM and Chrysler and other failing businesses (AIG and “big” banks).  The value of the Dollar is starting to move from the basement to the sub-sub basement.  The Chinese are starting to wonder if their investment of over $1 Trillion into US Treasuries is such a good idea.  What happens if the Chinese stop funding our debt?

Good question, I don’t know.

If you enjoyed this post, make sure you subscribe to my RSS feed!

Related Posts