Who Speaks for Entrepreneurs?

| Inc.com staff | Apr 25, 2013

A survey about the minimum wage shows up important
disparities between two groups that appear to have something in common:
They both claim to represent you.

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.
On 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 can
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–and its members are overwhelmingly conservative. The group also
recruits members based on its conservative, small-government agenda,
leading to, at best, a chicken-and-egg scenario.
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. So it’s no surprise that, when the NFIB
polls its members, they end up with conservative-leaning results.

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.