A Small Business Perspective on Minimum Wage

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Last week, Left Bank Books co-owner Jarek Steele took to the blogosphere to provide a small business perspective on the minimum wage debate. In his blog post, Steele pointed to ABA’s Minimum Wage Impact Calculator on the Minimum Wage Action Page, a new interactive bookseller tool that helps demonstrate in a clear and visual way the economic effects a given wage increase would have on a bookstore’s bottom line.

The minimum wage issue continues to grow as a high-profile public policy debate as more communities nationwide debate raising the minimum wage. On June 2, the St. Louis Post-Dispatch reported that St. Louis Mayor Francis Slay wants to raise the city’s minimum wage to $15 by 2020. The article noted that a bill is expected to be filed at the city’s Board of Aldermen this week.

In his blog, Steele wrote of his belief that the staff at Left Bank are more than employees and that “their lives mean something to me. They are my friends.” However, he acknowledged that his employees struggle. “I’ve only managed to bring the starting salary about $0.75 above minimum, plus free health insurance, book credit, bonuses at the end of the year, and an atonal cacophony of booksellers singing happy birthday for each person once a year.”

A $15 per hour minimum wage is not unreasonable, Steele continued. “In fact, I think the minimum wage should be tied to the rising cost of living. I think of many of my relatives (and myself in past jobs) making the minimum and know that standing at a fry vat doesn’t seem glamorous or heroic unless you know that the person standing there supports kids or parents or sisters and brothers by serving you your extra value meal. Why don’t they deserve a fair wage? What have they done wrong?”

Unfortunately, the issue of increasing wages — especially for those small business owners in retail — is very complex. “When I think of giving an across the board raise of nearly 45 percent in my own business, my stomach clinches,” Steele writes. “Before you encourage me to take less home, I’ll tell you that I’ve had only two raises since I became an owner. I’ve been with the store 13 years.”

Steel then describes the economic realities of owning a bookstore, and that there is little, if any, price flexibility.

Noting that “most independent bookstores operate on a net profit of about two percent,” Steele pastes an image of ABA’s Minimum Wage Impact Calculator that shows just how a wage increase that is too drastic, and implemented too quickly, impacts the bottom line. Simply put, a $3,900 net profit turns into a $25,000 loss.

“The question is how we can raise the minimum wage to meet the cost of living and keep businesses like mine afloat,” Steele stated. “After all, nobody gets paid if there’s no business.”

Here, Steele offers up some steps that would help small retailers increase their wages, such as giving tax and other incentives to landlords to rent to locally owned independent businesses at reasonable rates, or reducing fees and taxes for small businesses.