In today's New York Times Nobel laureate Paul Krugman argues that raising the minimum wage is good economic policy and will have little or no impact on business.
In the purity of statistical analysis and national economic theory, he may well be right. He is, after all, an internationally respected economist.
I'm just a small business owner, a serial entrepreneur. And there is no doubt in my mind that another increase in minimum wage will close our doors. This is a curious thing to type as a life-long liberal, as someone who has often lived well beneath the poverty level in search of personal freedom. So please stay with me.
And, yes, I know I'll take a beating.
One size does not fit all. The median household income in Seattle, where I grew up, is $60,665 according to the google gods and US Census data. Where I live now, in Appalachia, it is $32,763, and that is about $7k higher than it was the last time I looked. Not sure what it means, but that's not the point.
Our two businesses are so small they don't even qualify as small business according to the SBA website. We gross slightly over $1-million. Our employees are all part-time, all either homemakers re-entering the workforce or college students grateful to have jobs that don't involve deep fat fryers and might look like something on their resumes. (They also eat for free and get a substantial discount on the things we sell.) One business has been in operation since 1979, the other for 16 years. They are a third place, a community center, and an integral part to the stumbling, fractured efforts to rebuild our small town's downtown.
Our competitors are WalMart and Amazon.
Our ownership group (such highfalutin' words) consists of my in-laws, both retired from the local university, my wife (who's had more careers than even I have), and me, a refugee from publishing. And my brother-in-law, who's an absent partner working at a major university. My wife and I essentially jobshare; my in-laws' haven't taken a check out of the business in three years.
Not since minimum wage went up.
That's the difference. Minimum wage. Not the flood which ruined our fixtures, tore up our refrigeration units, and destroyed a significant amount of product. Because we weren't located in a flood plain, we could not get flood insurance. We ate the losses, and moved to higher ground.
The economy went in the tank. We cut hours back, pulled more shifts ourselves.
But our choices are, how do the economists say it? Inelastic. We can raise our food prices, but not enough to absorb higher wages, and we're already struggling to keep up with increased agricultural costs (and fuel surcharges, which have held for a while, but which are coming to get us one of these days). The products we sell...there we're stuck. We can mess with the product mix some, but fundamentally Amazon and WalMart can always undercut us, we can't charge more than list.
The numbers don't work.
Not for us.
Now, let me be clear. I believe people should make a living wage. Maybe not all jobs are meant to serve that purpose, that may be one option. Or maybe we need to scale these initiatives to reflect costs of living, and not simply how the world works on the coasts.
Here's who wins if minimum wage goes up: The big box stores. Because they CAN raise their prices. Because their volume WILL absorb higher wages. Because they can FORCE their suppliers to meet their price points. Because their remaining competition -- our little business, for example -- will quit nipping at their heels.
We don't count in the statistical analysis of the US economy. I get that. But the thirty-odd friends and employees we take to dinner every Christmas, they'll miss their jobs. And our community will miss our business if it has to close.
That's why Paul Krugman is wrong.
One last thing: Between we four who are here operating this enterprise are eight college degrees. If we can't compete, the game is stacked and the American dream is more of a chimera than even I imagine it to be late at night.
My two cents. Thanks for reading.