I fully support Brady on this. My small business (restaurant) employs just under 20 people. I opened a bit over two years ago. In that time, food costs have gone up, gas has gone all over the place (we have a delivery service, to get an edge on competitors and do catering), and brilliant Illinois has also raised minimum wage THREE TIMES.
I still haven’t raised prices. Why? Well, we’re in a recession for one. People are already complaining about prices, and they know that in many cases cost of living has remained steady or shrunk. Many in the Dixon area have lost jobs, as several local factories have fled/closed (another big one just fled to another state from nearby Sterling/Rock Falls area), so I’ve been worried how my market would respond. So what does that mean?
It doesn’t mean my mortgage goes down, but my payroll % still goes up. It doesn’t mean the high school kids I hire work any better or more effectively, but it does mean I give less raises to those who deserve them. It means I have less of a safety net for my own company, which can be dangerous in this kind of economy (or any). Basically it means I am far less profitable. So what do I, as a business owner, do?
Well, as mentioned, I give less raises. Period. The bulk of which would have gone to my managers and senior employees, who unlike the high school/college kids who get minimum–are actually trying to raise kids and pay for houses/rent! I work more hours myself, of course, and my salary guys often work more. I do less marketing then I would like, which could be damaging long term. I certainly don’t pay ahead on my mortgage, like I had hoped to. I go a little farther to get more out of my equipment, and put off new purchases I would like to make, and which would likely help my store. And finally, after this latest July increase, I am going to bite the bullet and raise prices. I can’t take three hits to my payroll while food cost is still increasing, especially if gas keeps rising (gas prices, besides directly impacting my delivery, have a huge effect on food cost).
So, let me recap. In my store, raising the minimum wage gives higher pay to high school students living at home and some college students, while lowering the amount I can afford to pay long time employees, hourly managers, and salary managers (i.e. the people people making a living that minimum wage SUPPOSEDLY helps). It weakens my business, and gives me less space to invest in the future of the business. And, ultimately, it is going to add to local inflation by raising prices, which I hope my market can absorb–otherwise, instead of not getting raises, the families I support are not going to have jobs at all. That scenario has fallen upon quite a few local families.
Now, I am only a case study. Take it for what you will. But I have been in either management or ownership for a decent amount of time, and if you don’t think this is a common case (as far as businesses that start at minimum) you just don’t understand business. Minimum is NOT a living wage, and it actually takes away from those who NEED a living wage. It hurts businesses (which, you know, create jobs…), especially small businesses (which, you know, drive economic growth…). AND A RECESSION IS A TERRIBLE TIME TO ATTACK SMALL BUSINESSES.
Now, I’ve seen many local shops go out. I’ve done my projections, and I’m confident I won’t be one of them. But I’m also fairly confident I won’t be opening a new store any time soon over in the Sterling/Rock Falls area (which, at one time, was part of my business plan). That’s okay…they don’t need jobs over there, do they? Or maybe I’m taking away from my argument by closing with so much snark, so I’ll just sign off by saying:
The minimum wage is not the savior of the working poor that it is sold as, plain and simple. And, frankly, you don’t need an economics degree to figure that out.
A little something I would like to add for RedState readers:
We have to push back against the idea that minimum wage helps the "working poor" or those trying to make a "living wage". It is not enough to just make good points--we have to get the message out. IMO, we have been losing the message battle on minimum wage, but not decisively. Kudos to Sen. Brady for taking a pro-jobs stand, even when he knows the Quinn camp will attack him over it.
We can still change common perception by emphasizing how destructive minimum wage laws can be, and how short-sighted they are. We can emphasize how a more free wage system actually HELPS families who are trying to make a living, and how it promotes business growth (thus creating more jobs). I think our current environment provides a great opportunity to do so--all the small (and big) businesses closing down demonstrate just what the repercussions can be in an all-too-real manner.
Feel free to refer to my business, and how minimum wage ties my hands behind my back, should you ever think it would be useful for this cause.
-Liandro Arellano Jr, IL