Atlanta, GA – April 14, 2014 – The federal government is weighing policy and legislation to raise minimum wage to $10.10, which would affect the paychecks of more than 16 million American workers. But 26 percent of small to mid-sized business leaders report that the nearly $3 increase would drive higher customer prices, according to a new survey released today by Lucas Group, North America’s premier executive search firm. The quarterly survey, called the SMB Job Generation Outlook, gathers insights from 400 small and mid-sized business (SMB) executives on their economic and employment plans as well as hotly debated national issues.
In addition to increased customer pricing, 29 percent of SMB leaders report that a $10.10 federal minimum wage would negatively affect their hiring or workforce plans. Nineteen percent said they would reduce current hiring plans, 14 percent would reduce current work force and 7 percent would eliminate all new hiring. Another 3 percent of responding companies say the proposed increase would result in closing their doors and going out of business.
“In studying small to mid-sized businesses, every number counts, and economic factors that may benefit the lowest wage earners as a whole could, in practice, harm certain subsets of that same group,” said Scott Smith, Chief Marketing Officer of Lucas Group. “We found that SMBs within the consumer services industry were more likely to express possible negative consequences to a $10.10 minimum wage. They were more likely to reduce current workforces and/or raise prices, than were businesses in other industries. The consumer services sector is a significant employer to minimum wage workers, and these potentially adverse business effects could mean real job loss and increased consumer hardship at the register.”
While some SMB leaders reported potential higher prices or reduced hiring, 52 percent of the survey’s respondents said a $10.10 minimum wage would have no effect on their business or hiring plans. SMB manufacturing companies and financial, insurance and real estate firms were most likely to report no foreseen effects.
“Wages are one piece of what has become a complicated budgeting process for the American SMB, with healthcare costs, competitive pricing, technological innovation, and regional factors mixing together to create a delicate balancing act for many companies,” said Smith. ”A rise in the federal minimum wage appears to have multifaceted consequences on various SMBs across the country and may demonstrate an unintended butterfly effect in some locals as well as certain industry sectors.”
In addition to gathering insight about top national issues, such as minimum wage, healthcare, and immigration reform, the Lucas Group survey also reports on SMB hiring plans for the next quarter. Forty-five percent of small to mid-sized companies responding to the survey said they plan to hire, a slight increase over the past two quarters. Additionally, 51 percent said they plan to hire in the next 12 months, a sign of longer-term optimism.
Although many SMBs plan to increase their workforces, respondents also revealed they continue to have trouble finding qualified candidates for open positions. Almost 60 percent of respondents report difficulty or extreme difficulty in finding qualified professional and management talent, with Information Technology and Sales ranking highest in difficulty.
Other highlights from the Q1 SMB Job Generation Outlook include:
• Healthcare costs continue to be the top concern for SMB leaders, ahead of talent availability, domestic and international competition, uncertainty in tax policy and environmental regulations.
• More than half of SMB leaders surveyed agree that the U.S. should ease immigration requirements for skilled workers in IT, science and other high-demand fields.
• 88 percent of respondents report business positions of growth or maintaining stability, and 74 percent are optimistic about their company’s economic prospects, the highest levels of optimism since early 2013.
The quarterly survey is conducted by Lucas Group in coordination with Polaris Marketing Research. For the full Q1 2014 SMB Job Generation Outlook, click here.
About the Survey
Conducted quarterly, the SMB Job Generation Outlook is a national survey of small to mid-sized business leaders. The Q1 survey was conducted by Polaris Market Research on behalf of Lucas Group from March 5-March 17, 2014. Each of the 400 respondents was a top executive, including CEOs, presidents and owners. The survey covered a wide variety of industries with manufacturing, finance/insurance/real estate and business services having the strongest presence. Forty-five percent of the respondents reported 2013 revenue between $50M-$150M and another 39 percent reported between $151M-$600M. Seventy-seven percent of responding SMBs employ between 100-5,000 workers. The majority of respondents (63 percent) are from private companies; 20 percent are public; 12 percent are family-owned; and 5 percent are owned by private equity.
About Lucas Group
Lucas Group is North America’s premier executive search firm. Since 1970, our culture and methodologies have driven superior results. We assist mid-tier to Fortune 500 Clients find transcendent, executive talent; Candidates fully realize their career ambitions; and Associates find professional success. To learn more, please visit Lucas Group at www.lucasgroup.com and connect with us on LinkedIn, Facebook and Twitter.
For additional information, please contact:
Alicia Deedy, Marketing Project Lead