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Wed March 19, 2014
Small Businesses And The Minimum Wage
I met owner of COAS Books, Mike Beckett, appropriately, in the business section of his downtown store to talk about the minimum wage.
"What I know is what it does to me and my business…I'm a small business, family owned," said Beckett.
He was 16 when he took his first job. He made minimum wage for the next 6 years.
"So I got a job as a sheet metal worker and bless their hearts, I don't know why they decided to keep me," said Beckett.
Then, he decided to work for his dad. He says he still made the minimum for a long time, but he considers that sweat equity for building something he still has to this day…his bookstore.
"I wanna work with my family…something bigger than me...that's kindof what these small businesses are."
He starts workers here close to the minimum, but he says he raises their wages to match their skills. Some employees are here to work for a summer. Others have been here decades. The ones with more experience are paid more, he says.
The U.S. Department of Labor raised the federal minimum a series of times between 2007 and 2009. In July 2007, it was raised from $5.15 to $5.85. One year later to $6.55, and then again in 2009 to $7.25 an hour.
Beckett says during that time he had to cut his staff from 35 employees to 30. He introduced some automation to eliminate employees still in place today.
"It was crippling to us….there were just all these things that happened," said Beckett.
Senior economist with Wells Fargo, Dr. Eugenio Aleman, recently talked with KRWG News about the minimum wage.
"There are some industries that are going to have more trouble than others…difficulty in passing that increase in salaries into what they sell," said Aleman.
So did Dr. Jim Peach, Regents professor of economics at NMSU.
"People talk about the cost of raising the minimum wage…but there's also a very positive effect of that. Minimum wage workers spend virtually all of their income…they spend it locally," said Peach.
Taking a look at another sector of small businesses takes us to the restaurant, La Posta, where owner Tom Hutchinson says raising the minimum by a lot on exempt employees like servers doesn't make sense to him.
"We typically get young men and women seeking employment for the first time…we're delighted to fill that role in their life," said Hutchinson.
Hutchinson also sits on the National Restaurant Association board of directors, says his industry is thrown in with others when it's not the same.
"Th average margin in my business is 3…4…5 percent," said Hutchinson
He says servers make well above the minimum after tips and considers it a sales position.
"They choose…to work flexible hours…upside of working on…tips," said Hutchinson.
Many economists and local leaders say raising the minimum would have little to no effect on large big-box retailers. As opposed as Hutchinson and Beckett are to raising it, they would agree completely as well. They argue local businesses like theirs who compete with large ones are the ones that will be hurt the most.
"If we go out of business…those big boxes have their pick of the litter and they grow," said Beckett of COAS Books.
They also argue that small businesses bring different value to the community.
"I live in my communities…as a result…we're the philanthropic foundation for the community in general," said Hutchinson.