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Taking Issues

Do the topics of minimum wage and health care automatically get your blood boiling? Maybe it's time to step back and think about more than your bottom line.

In a perfect world, entrepreneurs would be able to pay good wages, provide paid medical benefits to all employees and their dependents, and ensure that no worker ever has to choose between coming to work and caring for young children or elderly parents. Health care would be affordable, and minimum-wage laws would be unnecessary.

But even with this country's near-perfect economy, the world certainly isn't perfect. One of the curses of an imperfect world is that what you see is not necessarily what you get, and what you want is not necessarily what's best for you. This is especially true when it comes to small-business politics.

Take wages and health care. In the past, entrepreneurs could reflexively say mandates in these areas would negatively affect them. But now, given the United States' prosperity and tight labor market, everything has changed. It's an employee's market, which makes it more difficult to just say no to proposals for an increase in the minimum wage or requiring employers to provide health care for uninsured workers.

This long-raging debate over the minimum wage shows why knee-jerk reactions no longer apply. If the proposed Fair Minimum Wage Act is passed, minimum wages will increase by $1-- to $6.15--by September 2000. Predictably, small-business advocates like the National Federation of Independent Businesses (NFIB) oppose the proposal, citing now-standard refrains: Job creation will be stifled, some entrepreneurs could be forced out of business, there will be a trickledown long-term inflationary impact, etc., etc., etc.

But do these assumptions bear out? A recent survey by the Jerome Levy Economic Institute of 500 small companies found only 13 percent would be negatively impacted if the minimum wage were increased to $6 an hour, down from 21 percent in 1998.

Also, the NFIB says mandating health coverage increases insurance costs and makes employers unable to carry coverage. But proponents say an overwhelming need demands more responsible action: Statistics from the Employee Benefit Research Institute for 1997 (the most recent figures available) indicate almost 25 million workers ages 18 to 64 didn't have health insurance.

Changing public opinion is another reason to rethink hot-button issues. In our healthy economy, when small-business owners protest an increase in minimum wages or mandated bare-bones health care, much of the public fails to sympathize. Instead, they call entrepreneurs whiners--money-makers unwilling to share their prosperity with employees in the form of better wages and benefits.

However, this turning tide of public opinion has created somewhat of a knee-jerk reaction of its own. These are by no means black-and-white issues, no matter what your perspective. Many entrepreneurs do face the tough issues, they do make the right choices, and they do end up paying.

Sharon Miller knows that scenario well. Miller's Midland, Michigan, firm, Immediate Temporary Help Inc., employs 250 people, and pays $7 to $15 per hour, depending on experience. Her philosophy: You have to pay more to secure better workers and provide higher-quality services to customers. The cost of that philosophy: short-term losses. Recently, Miller lost a $260,000 contract to a competitor who was able to bid lower because it paid its employees less than Miller did.

"It knocks you right to your knees," she says. Still, her convictions remain unchanged. "How can I stand for excellence yet treat my employees like they're entry-level at best?"

Miller's situation paints a more accurate picture of entrepreneurship than does the stereotype of the greedy business owner. Running a business today involves cutthroat competition for both clients and employees. To survive, entrepreneurs must stop believing wholeheartedly in the mantras of certain advocates, and start thinking for themselves. What makes sense ethically, not just politically? What do your employees truly de-serve? What's better for your business in the long run, not the short term? When you can answer these questions, you'll have the tools necessary to succeed in this far-from-perfect world.

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This article was originally published in the October 1999 print edition of Entrepreneur with the headline: Taking Issues.

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