Business owners experience uncertainty about the future when facing a minimum wage increase. Given the highly competitive markets in which they operate as well as their extreme resource constraints, rural small businesses are exceptionally vulnerable when facing a minimum wage increase, yet little research existed about how a minimum wage increase affected small business, especially those in rural communities. The purpose of this qualitative multi-case study was to explore rural small business owner decision-making when faced with a 20% increase in the minimum wage and how these decisions affected the small business. This study focused on rural small businesses in Yuma, Arizona which encompassed communities within a 50-mile radius located near the southwest border of Arizona, California, and Mexico. Answering open-ended, semi-structured questions, 13 small business owners described the actions they took when the Arizona minimum wage increased by 20% on January 1, 2017 and how it affected their business. This study’s predominant conclusion is that a 20% minimum wage increase resulted in reduced net income, wage compression, increased expectations of employee efficiencies, increased product prices, changed hiring practices, the consideration to automate, decreased employment opportunities, as well as a diminished incentive for small business ownership. The adjustments that these rural small business owners made resulted in the owners struggling to break-even and facing great uncertainty about the future with minimum wage increases up to $12.00 per hour planned by 2020. Recommendations for future research include expanding the study population to all rural Arizona communities, comparing rural and urban small business decision-making, and studying small business market entry and exit as an adjustment channel.
|Commitee:||Kimmel, Sharon, Polastri, Patricia|
|Department:||Business and Technology Management|
|School Location:||United States -- California|
|Source:||DAI-A 79/12(E), Dissertation Abstracts International|
|Subjects:||Business administration, Labor economics|
|Keywords:||Adjustments to minimum wage increase, Effect of minimum wage increase, Employment effects of minimum wage increase, Rural small business, Small business decision-making|
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