From A Small Business Owner in Montgomery County, Maryland.
I want to discuss the real-world effects of the $15.00 per hour wage.
As a small business owner in Montgomery County, Maryland my business feels the negative effects of the new law initiated by County Executive Marc Elrich and his Takoma Park delegation. Fifteen dollars sounds good to the employee working at fast food and entry-level jobs, but the minimum salary requirement has consequential effects to the small business owner who is dependent on labor to operate his business. Fast food restaurants and box stores have circumvented the effects of the raise in minimum wage by installing kiosk machines, thereby eliminating labor costs.
Have you also noticed the dollar menu has gone away and prices have increased on most items?
Contrary to activist politicians who have never owned businesses, businesses are not created to provide jobs and benefits to the population, but rather to turn a profit. This involves managing overhead, which includes labor and employee costs. The majority of the general public do not realize that labor costs are minimally 20% higher than the actual wage paid. When you factor in unemployment, workers’ compensation, and social security matching, the increase is about 20%. If you add in mandatory sick leave required by Montgomery County (thanks to Marc Elrich and his Takoma Park associates) and health insurance, then the employer’s cost for an employee raises significantly.
So, what are the business owner’s options?
- They can raise their prices to compensate for the labor increases.
- They can absorb the loss.
- They can leave Montgomery County.
- They can go out of business.
When you have career politicians who have no experience at running a business, you create an anti-business climate.
I highly value my employees. I am careful to hire and retain hard working, loyal, ethical, and moral individuals. As my business is labor intensive, I pay my employees a fair wage between $25.00 and $30.00 per hour. Because of my size, however, I am unable to absorb the cost for health insurance or a 401k.
Let’s now discuss the graduated expectations of minimum wage.
What politicians need to realize is that minimum wage jobs are entry-level positions. People who need additional wages need to find a trade or seek advanced education. The message that is not told when raising the minimum wage is the graduated expectations that employees have. The employee making $25.00 and $30.00 per hour now expects $30.00 to $35.00 to keep up with the graduated expectation of minimum wage. Bear in mind a wage of $35.00 per hour is actually $45.00 per hour. Think about that the next time you pay $7.00 for a fast food hamburger and $4.00 for a tomato because the laborer in the field was paid $15.00 per hour.
During the County’s public hearing to debate raising minimum wage and mandatory sick leave, the sessions were (unsurprisingly) heavily stacked with political activists who have never owned businesses or worked for profit. The voices of business owners were silenced by outcries of naïve politicians opposed to capitalism and clueless of how to run a successful business.
Montgomery County is controlled by the activists of Takoma Park and they are not friendly to small business. Most recently we have seen this negative attitude towards business communicated in the forced, unjustified closures of many small businesses because of the alleged dangers of COVID-19.
Interesting how one can be safe from infection while shopping in Walmart and Home Depot but not in Joe’s Boutique. Again, it’s political activists with no business experience making the rules.