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Minimum Wage Hike Could Strain Small Businesses

business confidenceSPRINGFIELD, Mass (WGGB)- Massachusetts just raised minimum wage to $8 an hour at the beginning of this year, making it one of the highest in the nation. With President Obama pushing for $9 an hour minimum wage, it could have an impact on small businesses like Cheryl Rumley’s Apex Healthcare Services. “People should never be at poverty level, but I also believe that we just came out of the worst recession we’ve ever seen, and we are really as businesses we’re holding onto our money. We are just trying to make sure we are all just able to continue. We’ve been hit. It’s been very tough,” Rumley said.

Apex Healthcare provides home health aides to people of all ages with disabilities. For her more than 50 employees, a dollar an hour makes a big difference. “As a business owner, it’s not just $9 an hour, an extra dollar an hour, we pay worker’s comp on that, unemployment insurance on that, so everything that we pay in payroll in addition to it,” she stated.

For businesses like Cheryl’s, the Massachusetts Small Business Development Center Network has some tips in case an increase does take effect.  “Businesses need to look at this as a balancing act. They have to prioritize, and they’re good at it. They’re resilient. But they just can’t keep adding expenses with no relief. They’ll pass it onto their customers,” said the Network’s Senior Business Advisor, Allen Kronick.

Health care reform kicks in next year, and that could put additional strain on small businesses. “That’s going to have a big burden on small businesses to keep up with that. So you might see a slowdown in hiring because they’re trying to figure out, ‘how do we, on a monetary level plan for this in our business?’” Senior Business Analyst Lyne Kendall added.

Tax breaks will be available for small businesses, depending on the number of employees they have.

A bill proposed in 2011 hoped to bump minimum wage in Massachusetts to $10 an hour this year, to keep pace with the increased cost of living.

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