While the federal minimum wage bill stalls, cities including Seattle, Washington, DC, San Diego, and San Francisco have all passed minimum wage increases of their own. The wage increase varies, going up to $11.50 per hour in San Diego and up to $15 per hour in Seattle. And across the country, small business owners fall on both sides of the debate, many wrestling to reconcile the moral implications of low wages with the financial realities of running their businesses.
For instance, Lydia Stern supports an increase, even though it would likely require her to cut back on employees’ hours and spend more of her own time serving customers at Beadlush, a bead shop in Charlotte, NC. While a minimum wage increase “might be painful for a small business like mine at first, in the long run it will increase the overall amount of disposable income that can be spent in a specialty shop like mine,” Stern says. “I feel that, eventually, we would be able to bounce back to where I could increase hours for my team, freeing me up for managerial responsibilities.”
For most business owners, there are no easy answers. Here’s a rundown of some of the pros and cons.
Con: Raising costs without raising value
Increasing the minimum wage “will only raise costs, not increase value,” says David Sussman, CEO of Valcor Worldwide, a network of small business consultants. While a higher minimum wage will affect all small businesses, Sussman says it will be felt the hardest in franchise operations, quick-service restaurants, and small retail stores with tight profit margins. “There’s also a secondary impact here that many might not think about initially,” he says. “Once you raise the price for your minimum wage workers, you’ll end up having to raise the salaries for your managers and supervisors since your pay scale will become imbalanced.”