Small Businesses Were the Real Election Loser
Regardless of who you wanted to win last week, I’ll tell you who the real winner was. Big government!
The nature of government is that it continues to grow, no matter who is in charge. That’s the sad reality our books are designed to combat.
In the last several months, for example, the government has made policies with little to no regard for small businesses. Ever-changing policies surrounding shutdowns and mask mandates have put family-owned businesses at a disadvantage. And last week, voters in several states and localities chose to make it worse.
Florida passed a $15 minimum wage referendum, and Portland, the largest city in Maine, passed a $15 minimum wage with mandatory time-and-a-half pay during civil emergencies. (Like, ya know… a pandemic.) This would work out to be a whopping $18 an hour with the current $12 minimum wage.
As if the pandemic wasn’t hard enough on small business owners.
The reality is that the true minimum wage is $0; if businesses can’t afford to pay their employees these legal minimums, they will simply have to fire or not hire employees—or shut down entirely. Because of the government’s arbitrary interference into the economy.
We’ve seen several businesses that are pillars of the community shut down due to bad policies surrounding Covid-19, and sadly, it looks like these minimum wage hikes will be the nail in the coffin for many that have been hanging by a thread.
In a recent FEE article, they quoted the manager of Portland House of Pizza, a 30 year staple in the community:
It’s going to hurt everyone. It’s not like we have money trees out in the back parking lot. You have to make money to pay money, some places will go out of business.
“You have to make money to pay money.” That is an obvious principle to people like you and me, but big government and central planners somehow think small business owners have an endless amount of revenue that they are just… refusing to pay people?
But that’s not the case. Small business owners are going to be forced to find the money to pay their employees from somewhere. There is no money tree for business owners to pull from—they will be forced to cut down on employee hours, lay off employees, and raise prices.
In fact, that is exactly the decision one Portland business owner said he was facing:
In the last 7 months business has dropped from 30 to 50 percent and food costs have skyrocketed. This added increase on a business already depressed due to the pandemic is tough. We may have to either cut employee hours or cut back on business hours.
I don’t know about you, but to me that does not sound like the desired outcome of the increased minimum wage.
But this is what happens when the government tries to manipulate the market—the unintended consequences far outweigh the benefit of the increased hourly pay.
This is such an important principle. I wrote not one, but two books about it. In The Tuttle Twins and the Food Truck Fiasco, and The Tuttle Twins and the Messed Up Market, the twins learn about how outside interference in the free market often causes more problems than it helps.
These lessons are critical to understand, but typically not taught in schools. Voters across the country clearly don’t understand basic economics, and continue to vote for big government which hurts small businesses. With the Tuttle Twins, though, your kids can understand more than most adults do.
As for me, I just want my government to be limited and my markets to be free.
Is that too much to ask for?