Who Speaks for Entrepreneurs?
Some two-thirds of small businesses want to increase the minimum wage. Or, 93% of small businesses oppose raising the minimum wage.
It all depends on which poll you pick.
Surveys of small business owners and entrepreneurs are routinely contradictory, which perhaps shouldn’t be surprising. Business owners are a varied lot, after all, and what seems like a good idea in one part of the country or to entrepreneurs in one industry can seem like a disaster to their colleagues elsewhere.
But there’s more to it than that. Poll results provide valuable ammunition to their backers. They also cost money, so you'd be hard-pressed to find a lobbying group funding a poll just out of intellectual curiosity.
April 24th, the Small Business Majority, a lobbying group that represents small business owners, released the results of their survey about small business and the minimum wage. Compared to other groups representing small businesses, Small Business Majority tends to be on the liberal end of the spectrum. Here’s what they found:
- 67% of small business owners supported increasing the minimum wage, up from $7.25 an hour, and adjusting it yearly to keep pace with inflation
- 65% of small businesses believe that boosting the minimum wage will help the economy by putting cash into the hands of people most likely to spend it
Contrast that with the results of a March 18th survey from the National Federation of Independent Business. With
500,000 members, it’s the nation’s largest small business lobby, and decidedly more conservative. Its survey was conducted only in New Jersey, but with a Republican governor, two Democratic Senators, and a House delegation that's evenly split between the parties,New Jersey is not a particularly partisan state. Here’s what the NFIB survey found:
- 93% of small business owners oppose a ballot initiative that would raise the minimum wage by 14% next year and impose “automatic annual hikes” based on inflation
The press release announcing the results said that raising the minimum wage “would hurt neighborhood businesses and people in the economy who need entry-level work.” Pretty much the opposite of
the Small Business Majority’s stance that a higher minimum wage would be good for the economy.
Playing politics with small business
Something's clearly going on here. And it's not particularly good for entrepreneurs.
First, a look at the questions themselves. When the Small Business Majority asked its minimum-wage question, it stated the amount of the current minimum wage -- $7.25 an hour -- but did not mention how much the minimum might rise. You an understand how a business owner would listen to this question and think, “Well, $7.25 sounds awfully low. My people get more than $7.25 anyways, and keeping up with inflation sounds fair. Sure, let’s raise the minimum.”
Contrast that with the NFIB poll. It asked if respondents were in favor of amending the state constitution to include a 14% increase in the minimum wage
. It didn’t state the current minimum.
This sounds like a bigger deal: We’re starting by amending the state constitution, which could
be cause for caution in itself. “A 14% increase in the minimum wage” sounds like a lot. Most entrepreneurs didn’t get 14% raises last year, and they don’t want their payroll costs to go up by that much, either.
Now look at who the respondents were in each poll, and at who did the polls. Small Business Majority used a polling firm to get responses from 500 business owners. Using an outside pollster is one way to help guarantee that the respondents really are representative--you don’t want to have people all from one state, or from one industry, or one size business, answering the questions. That allows some level of confidence that the poll really does represent the sentiments of small business owners as a whole.
NFIB does things very differently. NFIB polls its members. Generally, NFIB supports conservative, small government positions. The association says it merely supports the positions that its members favor, as evidenced by the organization's frequent ballotting.
The last time I saw a map showing where the NFIB’s membership was strongest (and admittedly, it’s been a while), it looked like an electoral map of the United States, with NFIB members heavily concentrated in the red states. Jack Mozloom, senior regional media manager for the NFIB, says it's true that the NFIB has a harder time getting members "in big metropolitan areas." But, he says, that's not due to any particular ideology. Instead, he says, "It has more to do with our sales model. It’s just a lot more expensive to get good salespeople in cities.” When the NFIB polls its members, it's more likely to get conservative-leaning results, leading to conservative positions and, in turn, an appeal to conservative business owners.
The problem is that these polls matter. The press cites them, as do politicians trying to get support for their proposals. Having small business on your side is pretty much like getting both Mom and apple pie into your corner. That's just one reason that, historically, big businesses have been very happy to hide some of their legislative agenda behind the shield of small business.
Next time you're asked to join a small business association, you might think again. And ask yourself: Do these people really speak for me? Do a little research, and you may be surprised at the answer.