The following is a research project conducted to determine how those businesses most affected by an increase to the national minimum wage feel about President Obama’s proposal from a few months ago.

After the Executive Summary and Report, please find the Questionnaire used as well as some visuals in Data Findings.

Executive Summary

The topic of whether the minimum wage should be increased to $10.10, as proposed by President Barack Obama, has become an intense issue. This study has been conducted to bring to light the current sentiment by those most affected by a change in the minimum so that policy makers have a better understanding and grasp of what needs to be done.

The research conducted was limited to an area in Monmouth County, NJ that includes a range of socio-economic groups from upper lower class to high middle class. The target of the study was divided into two main demographic groups; Professional Managers and Owner Managers. These two groups represent Large Companies and Small Businesses, respectively. Further categorization includes gender and number of employees. Once the data was collected, it was then analyzed to yield results that could be used to complete the objective of accurately portraying how different demographics feel they will be impacted by increasing the minimum wage.

The results have limitations based mostly on the small sample size and specific area that the study was conducted in, as well as the types of industries represented. The implications of the information are important, nonetheless. Large Companies tended to be more against increasing the minimum wage than did Small Businesses. This seems to be because of the large labor force employed by retail corporations that have multiple locations across the state or country. Large Corporations also have more financial burden relative to Small Businesses and would feel the strain of increased labor cost more so than smaller businesses.

After considering the study results and factoring in the limitations, it seems important that policy makers and interested parties conduct similar research on a much larger scale in order to better represent the scope of the nation. With concern to this study, however, recommendations to policy makers would be to increase the minimum wage incrementally on a national scale, however to encourage states to take more of a lead based on each state’s respective economies. A change in the tax code is also necessary to allow businesses, large and small, to better face the current economic challenges. Increasing the minimum wage is only one small step to revitalizing the nation’s economy.

Report

Subject of Research

During President Barack Obama’s 2014 State of the Union Address, he highlighted the need to grow the economy. One of the methods of how he planned on doing so was by increasing the minimum wage to $10.10. As with nearly all things political, this was met with both praise and criticism. Some argue that an increase in the minimum wage will lead to higher unemployment as businesses that cannot afford the increased labor costs terminate employees. Others say a higher minimum wage has been in need for years and will help raise thousands of individuals above the poverty line, eventually leading to an increase in consumer spending. There are those who believe that the increase in the minimum wage will have no effect on the economy at all, as market forces cancel out the positive and negative effects of the raise. It is because of these many different opinions that the proposal to increase the minimum wage has become so controversial. In an effort to go beyond the politics, this study has been created to find out what those businesses and individuals are who are most affected by a change in the minimum wage perceive will be the impact of an increase.

The following research is directed towards any policy maker. However, for the purposes of the class project, this study will be to help those in the upper echelons of the United States government make a more informed decision on how to proceed with changing the minimum wage. Government institutions and groups such as the National Economic Council and Department of Labor may find the results of this study to be helpful in their decision making process. It is left to those in power to decide what to make of the following.

Research Process

Once the objective of the research study was finalized, it came time to lay out a plan of how the research should be gathered. The first step was to identify the target audience. Next was to create a questionnaire that could gather responses from the participants that would yield insight into how to best complete the objective (The questionnaire used can be found in the Appendix). After the questionnaire was completed the research was able to commence in the form of face-to-face interviews with managers and owners of businesses. After the interviews had taken place, the answered questionnaires were summarized and then analyzed (Interview summaries can be found in the Appendix). The raw data was then reconstructed to compare and contrast responses (The results of the data analysis can be found in the Appendix). The last step of the study was to interpret the information and how it can be used to best represent the thoughts and feelings of those who would be affected by an increase in the minimum wage to $10.10.

Target Audience

The targeted audience for this study was in an area of Monmouth County, NJ and included the towns of Port Monmouth, Middletown, Hazlet, and Holmdel. The reason this location was picked was because of the range of socio-economic demographics from upper lower class to upper middle class. The participants of the study where split into 2 main demographics: Professional Managers of business and Owners of businesses. Another way to interpret this would be Large Companies and Small Businesses, respectively. The reason for dividing the participants into these categories was to get an idea of how the increase in the minimum wage would impact corporations with multiple store locations, versus how it would impact small local businesses. Further sub-categories of these main demographics included the industries the businesses are associated with, gender of the participants, and number of employees that the participants oversee.

Key Findings

The findings from this study were somewhat surprising. The hypothesis at the beginning of the research was that the larger companies would have more neutral or positive reactions to the proposed increase in the minimum wage while smaller companies would be more negative. In fact, the results were nearly the complete opposite.

The outlook on the economy over the next 12 months was surprisingly evenly split among both demographics with 25% of participants having a neutral opinion and 37.5% believing the economy will be weak and 37.5% believing it will be strong (Figure 4). The data reveals that more Small Companies than Large Businesses believe that the proposed increase in the minimum wage will have a positive impact on the US economy. More Large Companies said that an increase in the minimum wage would negatively affect their business than did small companies. Despite these differences, both demographics seemed to agree that an increase in the minimum wage would have an overall positive impact on the US economy. When it came time to answer the question of whether there is a more appropriate level for the minimum wage, Large Companies most commonly responded with saying it should be greater (most adding that it should be only an incremental increase) and Small Businesses were split between saying the minimum wage is currently at an appropriate level and that it should be higher (again, they added at the end of the question that it should only be a bit higher). It is worth noting, however, that more respondents from the Large Company demographic answered by saying it should be lower than did respondents from Small Business. The above findings can be found by looking at Figures 2 and 3, by paying special attention to the modes for each question.

Other findings revealed that more men than women are in managerial or owner type roles within both Large Companies and Small Businesses. It is also worth noting that female managers and owners had very positive outlooks on the effect that an increase in the minimum wage will have on the economy and also the agreeableness of the proposed increase (Figure 8).

The most interesting findings came in the form of the open ended questions; more specifically, question 13. This question asked participants to briefly explain their answer to how they think the proposed increase in the minimum wage will affect their business. Large Companies seemed split between either not being able to afford a large increase in the cost of labor and responding by saying such an increase would not have much of an affect. In other words, it seemed that the financial health of the companies was either in good condition or poor condition, with not much in between. Small Businesses seemed much less worried about the increase in the minimum wage with some businesses in the food/service industry (restaurants, delis, etc) were actually hopeful that it would lead to minimum wage workers spending more at their establishments. One Small Business respondent that belonged to the service industry even added that “people will always need haircuts”. So it seems as though the original hypothesis that Small Businesses would be most against increasing the minimum wage was incorrect.

Recommendations

Based on the observed data, it would seem that the overall sentiment from both Large Companies and Small Businesses is positive when it comes to increasing the minimum wage. Policy makers should also keep in mind that many respondents added that, although they believe an increase would be a positive for workers and the economy, they feel a slight increase would be better.

The results stating that Large Companies feel they would be more negatively affected than Small Businesses is also very important. Perhaps this should lead to a change in policies towards corporations and how they are taxed. A change in tax codes to give all businesses, large and small, more breaks may be beneficial and allow companies to hire more workers and/or pay employees more. Several managers told me of the financial burden of new policies such as Obamacare that has forced companies to scale back shifts and even the number of employees. This should all be taken into account before the minimum wage is increased and the cost of labor rises.

Limitations

As with any research, there are limitations to the findings. In the case of this study, there are a few limitations that may skew the results. One example is the target audience. Although the study consisted of several different towns that contained different socio-economic groups, it was very much focused on a suburban area in New Jersey. The United States has such a wide array of people, regional cultures, etc, that any study that is restricted to a specific area, no matter how diverse the people in the selected region, will not accurately portray the nation as a whole. In the same respect, the industries that the companies and businesses that respondents represented in the study were isolated (unintentionally) to food, service, and retail. There are many other industries that will be affected by a change in the minimum wage that are unaccounted for. It is also important to note that each state has its own minimum wage that is either equal to or greater than the national level. Because of this, had this study been conducting in a state with a higher minimum, the answers may be different. There are more limitations, to be sure, however the ones listed above are the most important to be taken into account.

Conclusion

Limitations of the study aside, the overall message to be taken away from the research is that Large Companies and Small Businesses feel that an increase in the minimum wage is necessary. Such an increase will result in individuals being able to pay for more basic goods and necessities, thereby giving other businesses a slight boost. Increasing the minimum wage should not, however, be viewed as an answer to the country’s current economic issues. There will be negative consequences, especially under current regulations and tax codes, for many businesses that will have to cut hours, shifts, and even employees to maintain profitability.
When the findings are taken into account with the limitations, it becomes clear that it is necessary to run further, more in depth, studies across the nation. Such nation-wide studies will yield more clear results as to how increasing the minimum wage will impact Large Companies, Small Businesses, individuals, and families. A restructuring of current tax codes for corporations and small businesses has also been needed for quite some time; more leniency and tax breaks will relieve some of the burden that businesses in this country are currently facing.
It is high time that real, progressive action is taken to revive this country’s economy. This study was completed with the intent of giving a small glimpse to policy makers and interested individuals of the current sentiment towards the economy, the current minimum wage, and the proposal for an increase in the minimum wage to $10.10. More needs to be done, and this research is only the beginning.

Questionnaire

Introduction

Hello, my name is Aristidis Marousas and I am a student at Rutgers University.  I am conducting a brief survey as part of a class project that will take approximately 15 minutes of your time to complete.  Thank you in advance for your participation.

Questions

1. (Qualifying) Are you a manager of a business?
   1. Yes
   2. No
2. (Qualifying/Segment)Which of the following two categories of manager would you describe yourself as?
   1. Professional/Employee Manager
   2. Owner Manager
3. What industry does the business you manage represent?
   1. Electronics Industry
   2. Food industry
   3. Manufactured Goods Industry
   4. Retail Industry
   5. Service Industry
   6. Other
4. (Qualifying/Segment) What is your gender?
   1. Male
   2. Female
5. (Qualifying/Segment) How many employees do you oversee?
   1. Less than 10
   2. 10 or more
6. On a scale of 1 to 5, how strong do you see the US economy being in the next 12 months? (1 being very weak and 5 being very strong)
   1. 1
   2. 2
   3. 3
   4. 4
   5. 5
7. Out of the employees you oversee, approximately how many receive the minimum wage (defined as being $8.25 or less)?
   1. None
   2. Less than half
   3. Half
   4. More than half
   5. All
8. Do you know more of a precise number of how many are earning minimum wage?
   1. (Open Ended)
9. What is the employment status of most of your employees (more than half) earning the minimum wage?
   1. Full-time
   2. Part-time
10. To the best of your knowledge, do most (half or more) of those employees who earn the minimum wage work another job besides the one they work here?
    1. Yes
    2. No
11. How do you think the proposed increase to $10.10 in the minimum wage will affect your employees?
    1. No effect
    2. Positively
    3. Negatively
12.  How do you think the proposed increase in the minimum wage will affect your business?
    1. No effect
    2. Positively
    3. Negatively
13. Please briefly explain your answer (refer to previous question)
    1. (Open Ended)
14. How do you think the proposed increase in the minimum wage will affect the economy of the USA, overall?
    1. No effect
    2. Positively
    3. Negatively
15. How do you think the proposed increase in the minimum wage will affect you?
    1. No effect
    2. Positively
    3. Negatively
16. On a scale of 1 to 5, how agreeable do you find the proposed increase in the minimum wage to $10.10? (1 being very disagreeable and 5 being very agreeable)
    1. 1
    2. 2
    3. 3
    4. 4
    5. 5
17. What sort of managerial/business actions do you think you would undertake as a response should the minimum wage be raised to $10.10?
    1. (Open Ended)
18. Is there an amount you think would be more appropriate for the minimum wage?
    1. Equal to
    2. Less than
    3. Greater than

Closing

That will conclude this survey. Thank you very much for your time and patience. Have a good day/night.

Data Analysis