Carol L Schroeder

Minimum Wage, Maximum Concern

April 1, 2014

Minimum Wage, Maximum ConcernChanges to the minimum wage laws will have a major impact on retailers across the country.  And yet I think we would all agree with President Obama’s statement that “no one who works full-time should have to raise their family in poverty. Right now, a full-time minimum wage worker makes $14,500 a year—which leaves too many families struggling to make ends meet, with a family of four with a minimum wage worker still living below the poverty line.” In 2013 the President called on Congress to raise the Federal minimum wage in stages from $7.25 to $9 in 2015, and to index it to inflation thereafter. But this year’s proposal, which has not yet passed, is to increase it to $10.10. Connecticut is already on board, with legislation to increase the minimum wage there to $10.10 by 2017. Other states are looking at less drastic increases, since minimum wage is both a federal and a state regulation (you need to pay whichever is higher). None of us would question Obama’s statement that supporting a family on $14,500 a year would be very difficult, especially in light of the fact that many areas lack affordable housing for low-wage workers.  In fact, if you want to lobby locally to increase the standard of living for your employees, this is a topic you might consider working on in your community. (The New York Times has a great program for showing how challenging living on minimum wage is even for a single person.) If we think that no one actually earns minimum wage (since many of us independent retailers pay at above that rate), here is a sobering statistic: 4.8 million American workers today earn minimum wage, up from 1.7 million in 2007. These are potential customers who have trouble purchasing our products, because they are barely making it. So an increase in the minimum wage might have a positive impact on sales. As Henry Ford said, “It is not the employer who pays the wages. Employers only handle the money. It is the customer who pays the wages.” But even if sales do increase, it is obviously a concern that some small retailers will not be able to afford their current staffing levels.  Many retail employees, especially young people, are not supporting a family of four on what they earn, and are happy to have a part-time job with flexibility, however the increased minimum would apply to them as well. One thing is certain, though—this is an issue of concern to all small business owners.  Even if you are now paying $1 above minimum wage, your employees may expect to get about that amount above the new minimum. As you probably know, there is a groundswell of public support for increasing the minimum wage, and even if you are going to struggle because of the change it may not be politic to speak out against it.  Instead you might look for ways to increase your sales and margins so that you can afford to pay your employees at a higher level.  Gradual increases may help soften the impact —would today be a good day to give your staff a raise?