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Drive for $15 Minimum Wage Is Sure to Impact Small Business Bottom Lines

Drive for $15 Minimum Wage Is Sure to Impact Small Business Bottom Lines

By | 04.20.15
Drive for $15 Minimum Wage Is Sure to Impact Small Business Bottom Lines

One of the largest wage protests in American history is about to launch, as thousands of fast-food-restaurant and retail workers are expected to lobby to raise the minimum wage to fifteen dollars an hour. In fact, rallies are schedule to take place in 230 cities across the country from California to New York and various states in between. While these protests are primarily focused on big corporations like McDonalds, if the minimum wage were to increase to fifteen dollars an hour, this would have a major impact on those small businesses that actually employ almost half of the U.S.’s total private sector workforce.

The fifteen dollar an hour minimum wage push has begun to take form at the local government level in certain areas of the country. Seattle was the first big city in the U.S. to pass a fifteen-dollar minimum wage law in 2014 and launched its decade-long transition this past month. In Oakland, a 36 percent increase in minimum wage just went into effect last month (from the California statewide minimum of nine dollars and hour to $12.25). San Francisco has a law in place that will increase the minimum wage to fifteen dollars an hour by 2018. And in October 2014, Berkeley raised the pay rate to ten dollars an hour, and that is set to increase to eleven dollars an hour by October 2015.

There is a growing concern among small business owners in these areas over the long-term repercussions of a mandated pay increase. While most owners feel that it’s important for workers to make a decent living, this pay adjustment may necessitate significant price increases (some restaurants in Oakland have raised the price of their food by as much as 20 percent). And this increase in the cost of goods and services may very well directly impact small business’s supply chains as well.

The Guardian interviewed small business owners and managers across the country to get their reaction to this minimum wage movement and to get a sense of how they think the minimum wage will impact their business operations. Here is a glimpse at some of the key takeaways from the owners’ perspective.

  • Karen Heisler, co-owner of Mission Pie bakery in San Francisco: Heisler’s major concern with the minimum wage bump (which is becoming a reality in her native San Francisco as described above), is that it doesn’t take into account the challenges faced by tip- and commission-based businesses. She’s concerned that the change will lead to a decrease in the number of businesses that have twenty or so employees due to the rising cost of operation that this will entail.
  • Marco Giannini, CEO of Proteinn for Pets in Los Angeles: Giannini is actively planning for a wage increase over the next three years. He feels confident that the adjustment will not negatively impact his business, as it is a smaller store format and he can compensate for the extra overhead by increasing his outsourcing and technology resources.

Reference:

Wang, Ucilia. “What a $15 Minimum Wage Means for US Small Businesses.” The Guardian. 4/15/15.

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