Target raised its minimum wage only because it can afford to do so; small businesses cannot

In 2017, Target announced that it would raise its minimum wage to $15 an hour by the end of the year. But in light of current events, the store will move to change the minimum wage by July 5. Although this is fast-tracked it is well in accordance with Minneapolis’ minimum wage raise policy

The Minneapolis minimum wage for large employers rises from $10.00 as of Jan. 1, 2018, to $15.00 as of July 1, 2022, and is adjusted for inflation every Jan. 1 thereafter. The Minneapolis minimum for small employers has a more delayed phase-in than for large employers, but will attain the same level as for large employers as of July 1, 2024.

This has come at a time when small businesses are urging states to postpone most of their scheduled minimum wage raises to a later time. Target raising its minimum wage sure casts a veil on the hardships businesses are facing right now. But this does not invalidate the worries that most small businesses have when it comes to minimum wage. Nor does it justify some calls to raise the federal minimum wage to $15 as we have seen.

In light of Target’s announcement, Sen. Bernie Sanders, I-Vermont, called on Congress to pass his Raise the Wage Act, increasing the minimum hourly wage from $7.25 to $15, in order to “guarantee a dignified, living wage for every worker in America.

What needs to be understood is that Target is a big company, and during the pandemic, it did not face as much disruption to business as did most small businesses. Henceforth, Target can afford to pay its employees $15 an hr. But Target should not be the baseline for minimum wage. Small businesses cannot afford the minimum wage. It hurts their bottom line during normal times.  Now it will be even harder for small businesses to recover now while paying their workers $15 an hour.

Businesses are focusing on recovery

Businesses, in whatever circumstance, want to hire people that produce more than their wages. This is to ensure that they pay their workers, cover their expenses and still be able to make a profit. But small businesses have been decimated by the lockdowns. Establishments like restaurants are facing lower revenue levels and will continue to do for the foreseeable future.

Therefore, requiring such businesses to pay their workers $15 an hour would be the same as asking some of them to go out of business. Since most small businesses already operate on a razor-thin margin, any increase in minimum wage increases their costs significantly. But at this particular time, the effects would be more magnified.

And this is not only bad for businesses, but it is also bad for workers with low skills. Raising the minimum wage when a lot of people are trying to get back into the workforce will make low skilled workers unemployable. Raising the minimum wage will kill businesses and it will also kill jobs