Raising the Minimum Wage and Its Effects on Small Business in Michigan

Abstract

Due to the recent increase in Michigan's minimum wage and the disputed effects of a higher minimum wage on the economy, this study looks at the typical ways in which minimum wage raises effect small business firms. How the firms offset the cost of higher minimum wage is examined through previous empirical studies and through a survey questionnaire of local Michigan firms. Given the evidence of negligible employment effects, and of multiple channels of cost adjustment available to firms, small businesses do not experience significant disadvantages from an increase in minimum wage in the short-run.