Lawmaker Says ‘We Don’t Want’ Small Businesses That Can’t Pay $15 Minimum Wage

Rep. Ro Khanna (D-Calif.) speaks during a press conference in Washington on April 4, 2019. Saul Loeb/AFP via Getty Images

Rep. Ro Khanna (D-Calif.) said on Feb. 21 that, while he’s “all for” small businesses, those that can’t afford to pay their employees $15 an hour are essentially undesirable.

Khanna made the remarks in an interview on CNN’s “Inside Politics,” in response to a question about how hard it might be for many small businesses to afford increased labor costs if the federal minimum wage is raised to $15 an hour.

“Businesses like Amazon and McDonald’s, for example, can and perhaps should, pay more, but I’m wondering, what is your plan for smaller businesses?” CNN’s Abby Phillip asked. “How does this, in your view, affect mom-and-pop businesses who are just struggling to keep their doors open, keep workers on the payroll right now?”

“Well, they shouldn’t be doing it by paying people low wages,” Khanna replied. “We don’t want low-wage businesses. Most successful small businesses can pay a fair wage.”

“I love small businesses, I’m all for it, but I don’t want small businesses that are underpaying employees,” Khanna said. “It’s fair for people to be making what they’re producing. I think $15 is very reasonable in this country.”

A February study (pdf) by the nonpartisan Congressional Budget Office found that increasing the federal minimum wage to $15 an hour by 2025 would cost 1.4 million jobs over four years. At the same time, it would raise wages for around 27 million people and would lift 900,000 people above the poverty line.

President Joe Biden and many Democrats back legislation that would more than double the current federal minimum wage of $7.25 an hour. Republicans and some moderate Democrats fear that the move would cost jobs, particularly as many small businesses struggle amid the pandemic.

Some have argued against a one-size-fits-all approach, with Sen. Joe Manchin (D-W.V.) suggesting that a lower, $11 minimum wage would be more appropriate for West Virginia. Asked in early February whether he’s supportive of a $15 minimum wage, Manchin told The Hill: “No I’m not. I’m supportive of basically having something that’s responsible and reasonable.”

A Heritage Foundation study on the impact of a $15 minimum wage concluded it would increase child care costs by as much as 43 percent in some states.

“It’s actually going to come back and end up hurting the people that these lawmakers are trying to help the most,” said Rachel Greszler, a research fellow at the Heritage Foundation and author of the study, in an interview with NTD.

“I estimate that you would have to increase their costs by 21 percent on average across the United States. That would translate into an extra $3,728 for a family with two children,” Greszler said.

Economists have for years hotly debated the issue of raising the minimum wage, with advocates arguing that raising salaries will boost purchasing power and the added spending will lift the economy, while opponents argue it will hurt businesses and lead to higher unemployment.