• Sixty percent of small business owners surveyed say increasing minimum wage would hurt small businesses, while approximately 60 percent also said they would not reduce workforce or benefits if an increase occurred.
• Small business optimism remains unchanged from the previous quarter.
• Business owners say finding new business, the economy, healthcare and government are biggest challenges facing their businesses today.
SAN FRANCISCO - November 21, 2013
Small business owners are divided on whether the national minimum wage should be increased, and a majority of small business owners say increasing the minimum wage would hurt business owners, in the most recent Wells Fargo/Gallup Small Business Index.
Increasing the minimum wage was one of many concerns conveyed by small business owners in a survey conducted Oct. 23-29, after the government shutdown ended. Overall, optimism among small business owners did not change significantly in the survey.
In the latest Wells Fargo/Gallup Small Business Index (*PDF), small business owners were divided between those who approve (47 percent) and those who disapprove (50 percent) of a law raising the national minimum wage to $9.50 an hour. This contrasts with a separate recent Gallup poll of the general American public, in which three-fourths of respondents said they supported increasing the minimum wage from the current $7.25 to $9.
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In the Wells Fargo/Gallup Small Business Index, 60 percent of survey respondents said increasing the minimum wage would hurt small business owners. About 30 percent reported that an increase in the minimum wage would have little effect on most small business owners. Yet when asked how approval of minimum wage legislation would impact their businesses, approximately 60 percent of small business owners said they would not reduce their current workforce or employee benefits.
The survey results follow recent state and federal government legislation and proposals on the minimum wage, including this month’s passage of a new law in New Jersey that indexes future increases in the minimum wage to inflation. In September, the California state legislature voted to raise the state minimum wage to $10 an hour by 2016. A proposal to raise the minimum wage also is being considered in the U.S. Senate.
Small business optimism
The Wells Fargo/Gallup Small Business Index remained mostly unchanged over the past several months, and is currently at a positive 24 (+24), compared with the third quarter Index score of positive 25 (+25). While it’s the second highest score in the last five years, the Index score is below pre-recession levels.
When business owners were asked to identify the most important challenge facing their businesses, several concerns rose to the top of the list. In the fourth-quarter survey, business owners once again said their top concern was finding new business, yet this concern dropped from 28 percent to 13 percent of responses. Other top concerns include the economy (12 percent), healthcare (11 percent) and government (11 percent). The number of business owners identifying “government” as the most important challenge was much higher this quarter than in the third quarter.
“Small business owners are still in wait-and-see mode,” said Doug Case, Wells Fargo Small Business Segment manager. “As they plan for next year, they are looking for more economic stability. Yet the debates around the debt ceiling and Federal budget signal more uncertainty ahead. And uncertainty suppresses business growth and expansion.”
The survey also found that nearly one in four small business owners expect to have a better operating environment and are more optimistic about their business’s future in 2014. Half of business owners surveyed said they expect the operating environment next year to be about the same as this year.
Small Business Index Key Drivers
Wells Fargo, together with Gallup, surveys small business owners quarterly across the nation to gauge their perceptions of their present situation (past 12 months) and future expectations (next 12 months) in six key areas: financial situation, cash flow, revenues, capital spending allocation, hiring, and credit availability.
Wells Fargo/Gallup Small Business Index Scores: Q3 2012 – Q4 2013
|Overall Index Score||Present Situation||Future Expectations|
|Q4 2013 (surveyed October 2013)||+24||+7||+17|
|Q3 2013 (surveyed July 2013)||+25||+4||+21|
|Q2 2013 (surveyed April 2013)||+16||+2||+14|
|Q1 2013 (surveyed January 2013)||+9||-2||+11|
|Q4 2012 (surveyed October 2012)||-11||-10||-1|
|Q3 2012 (surveyed July 2012)||+17||-1||+18|
About the Small Business Index
Since August 2003, the Wells Fargo/Gallup Small Business Index has surveyed small business owners on current and future perceptions of their business financial situation. The Index consists of two dimensions: 1) Owners’ ratings of the current situation of their businesses and, 2) Owners’ ratings of how they expect their businesses to perform over the next 12 months. Results are based on telephone interviews with 605 small business owners in all 50 United States conducted October 23-29, 2013. The overall Small Business Index is computed using a formula that scores and sums the answers to 12 questions — six about the present situation and six about the future. An Index score of zero indicates that small business owners, as a group, are neutral -- neither optimistic nor pessimistic -- about their companies’ situations. The overall Index can range from -400 (the most negative score possible) to +400 (the most positive score possible), but in practice spans a much more limited range. The margin of sampling error is +/- four percentage points.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a nationwide, diversified, community-based financial services company with $1.5 trillion in assets. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 9,000 stores, 12,000 ATMs, and the Internet (wellsfargo.com), and has offices in more than 35 countries to support the bank’s customers who conduct business in the global economy. With more than 270,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 25 on Fortune’s 2013 rankings of America’s largest corporations. Wells Fargo’s vision is to satisfy all our customers’ financial needs and help them succeed financially. Wells Fargo perspectives are also available at blogs.wellsfargo.com.
For more than 70 years, Gallup has been a recognized leader in the measurement and analysis of people’s attitudes, opinions and behavior. While best known for the Gallup Poll, founded in 1935, Gallup’s current activities consist largely of providing marketing and management research, advisory services and education to the world’s largest corporations and institutions.
Note: Complete survey results available upon request or on the Wells Fargo Business Insight Resource Center.