Good for Workers, Good for Business: #RaiseTheWage

by Secretary Tom Perez on January 23, 2014 · 10 comments

Secretary Perez sits down with business owners from across the country to discuss the importance of a federal increase in the minimum wage

When I became labor secretary a little over six months ago, I made increasing the minimum wage one of my top priorities. During the time since, I’ve met with hard-working Americans who’ve shared with me their heart wrenching stories about what it’s like to live on the minimum wage, making constant choices between things like paying the rent or putting food on the table.

In the wealthiest nation on earth, no one who works a full time job should have to live in poverty.  That’s a fundamental value proposition, an article of faith in our country that I know an overwhelming majority of Americans agree on.

Today I had the chance to hear from twenty men and women who run businesses, including many who own small businesses. They’ll be directly affected by any increase in the minimum wage. I learned it’s not just workers who support a federal increase; What I heard from these business owners is that raising the wage would help their businesses, too, by putting more money in the pockets of those in their communities.  Here’s what a few of them had to say:

Charmington’s Cafe in Baltimore, Md.

Amanda Rothschild runs a small café in Baltimore in which she pays her employees just above the current federal minimum wage, and she does so because it’s good for her bottom line. She told me that when you put more money in workers’ pockets, they stay on the job longer which reduces turnover and training costs: “Our training costs would be significantly higher if we paid lower wages and we had the kind of turnover that you typically see in a restaurant.” She also said that she wants to see an increase in the minimum wage so that more people in her community could spend money in her café.

Emory Knoll Farms in Street, Md.

John Shepley is co-owner of Emory Knoll Farms, a small wholesale nursery in Maryland. He makes a strong economic argument for paying those at the bottom of the income ladder a little bit more: “They’re spending 100-percent of their take-home pay in the local economy. It’s recirculating. They’re spending it on rent, groceries, cars, new tires – all the things you need to live.”

Vintage Vinyl in St. Louis, Mo.

Lew Prince runs Vintage Vinyl, a record store in St. Louis and is a survivor in an industry that’s seen a significant downsizing in recent years. He echoed Amanda’s words that increasing the minimum wage would lead to worker retention and a stronger local economy: “I’m in an industry where 60% of the businesses are closed in the 21st century. If you think about having a relationship with your community and a relationship with your customers, it starts with your relationship to your employees.”

Vintage Vinyl owner Lew Prince (far right) listens on as other business owners share their thoughts with Secretary Perez

These business owners are not alone. A broader coalition and consensus is emerging. Yesterday I was in Silicon Valley where I met with business leaders and employers who aren’t directly paying any of their workers the minimum wage. But even they understand the issues that affect their bottom line. They want to make sure that people have money in their pockets to buy the products they’re making.

The take-away from these conversations is simple: When we lift the wage floor, it not only betters the lives of those whose wages are directly affected, it also lifts the economy as a whole.

The business leaders I’ve talked to in the last few days shatter the myth that a higher minimum wage hurts the bottom line. They know that our economy is powered by consumer demand, and it will benefit from more money in the pockets of working families who will spend it on goods and services. Better than anyone, business leaders know that leads to business growth and job creation. It’s time Congress acted to #raisethewage.

{ 10 comments… read them below or add one }

1 Kimo Jarrett January 24, 2014 at 12:57 am

You’ve got to be kidding me, right? These small business owners ARE NOT paying their current employees more than the minimum wage, so if they feel so strongly about this issue, why aren’t they paying their employees a higher wage? Could it be that they are simply ignorant because they couldn’t be stupid or perhaps aren’t good business people or simply not very smart?

Any intelligent business owner understands the free market system, so whatever the prevailing wage is for any industry is determined by the inventory of the unemployed who would trade their time for money. That’s how wages are paid. yet, paying unskilled, low educated, inexperienced workers more money is a recipe for failure.

Increasing the wages of the employees who are productive, reliable, friendly and continually increasing their skills along the way while using benefits, bonuses, promotions and other incentives is the best retention strategy for a small business owner to employ and grow their business.

Employers who fail to reward their productive employees will eventually lose them and thus they’ll have to start the process again, won’t they? A smart business owner won’t do that often but most business owners do, don’t they? That’s why most fail to go beyond five years in business. I could go on and on but keep government out regulating wages because the market will determine what is the competitive wage regardless of industry.

2 Ron Reed January 24, 2014 at 7:04 am

Doesn’t make sense. If they feel raising their wages would reduce turnover and lessen the cost of training why aren’t they doing it now

3 Julie Nielson January 24, 2014 at 8:05 am

These small businesses say they want to see the minimum wage raised so why haven’t they increased their wages on their own. There doesn’t need to be a federal law passed for them to pay their employees more. It sounds like an excuse for not doing it until everyone else has to.

4 Leane January 24, 2014 at 9:16 am

Have you considered the impact of raising the minimum wage on the economy as a whole – it will increase the cost of everything else as the employers will not “eat” the increase. The result will be higher costs of EVERYTHING which will have a huge negative impact on those with set incomes such as social security, retirement, and disability. The outcome will still be that the minimum wage, entry level jobs will still be suitable for part time jobs, secondary incomes, and stepping stones as people develop job skills to move up to better paying jobs if that is what their goals are. Minimum wage jobs were not meant, in my mind, to support a family! Eventually, the cost of living will increase to the point where a minimum wage of $10, or whatever number, will not be any more sustaining than a $4.25 minimum wage was in its day. The better question, in my opinion, is how to move folks who are trying to support self and family on to the better paying opportunities over time, thus opening the minimum wage jobs to students, part-time earners, secondary income earners, and new entrants to the job market. Thank you for the opportunity to voice my thoughts.

5 Matt January 24, 2014 at 9:35 am

While paying above minimum wage has provided these employers more productive employees raising the minimum wage will degrade this production. They are competing for your hirer pay job so you can be selective in who you hire. Raising the minimum wage will decrease their buying power as the cost of goods and services will go up. Those that are in middle income ranges will have a decreased buying power and will spend less at connivence services and food services. Personal debt will likely increase and the middle class will shrink even more. Government cannot fix the economy directly. Minimum wage jobs are entry level and not intended to be living wage jobs.

6 Chris January 24, 2014 at 10:13 am

It is so insulting to read articles such as this one. If you are a small business owner or any business for that matter and you are arguing that hire wages will improve things. Here is a tip… RAISE the wages. There is no gun to your head requiring you pay someone a low wage. I start my employees higher and offer advancement rapidly. It is ridiculous to state that higher labor cost does not affect the bottom line. The Federal minimum wage should not be raised. There are location all over the U.S. where it is already a stretch to pay some one the FMW for making a sandwich or sweeping the floor. On the other hand laces where the cost of living is higher, employers have the duty to pay higher wages. For example I walked in to a fast food place recently where the starting wage was $13 an hour.
If we raise the wages what is going to be the incentive for construction or line work? If you can make a living wage at a fast food joint what will push people to move forward? We are already where we are because there is such a lack of drive in America. You can lie to yourself all you want. Out of need comes drive.

I know this is going in to deaf ears… enjoy your $15.00 burger. You may want to open your eyes and see that the more you make the more you spend at the bottom. Housing, utilities, meals… there are going to cost more the moment the bottom line is raised. More so than it already has been going up.

7 Steve Buell January 24, 2014 at 2:22 pm

Do these business leaders realize that they can pay whatever they want above the Minimum wage to their employees and we don’t need the mimimum wage increased to pay employees more?

8 Brian England January 24, 2014 at 3:58 pm

Secretary Perez listened carefully to everyone who attended and everyone was given the chance to comment. Everyone round the table cared about people and the importance of treating people fairly. You could tell Secretary Perez has done his homework and was seeking input from all sides. A very good meeting!
It is time to raise the “Entry level wage” !

9 Don (Maintenance Management) January 24, 2014 at 6:50 pm

Thank you Vintage Vinyl in St. Louis, Mo. for speaking up with your actions.

10 Karl Jaensch January 27, 2014 at 2:43 pm

Mr. Fast-food Chris:
You should welcome a higher federal minimum wage which will afford your floor-sweepers and sandwich makers a decent standard of living because 1) it is a standard which keeps your competitors from undercuting your cost of serving sandwiches in a swept (i.e., clean and attractive) store, 2) it helps you attract competent and loyal workers who make your customers feel well treated (by the way, I really appreciate floors being swept in a way that does not make eating a sandwich while that’s going on an unpleasant experience), and 3) here’s one just for your anti-goverment attitude: When employers like you pay a living wage you help reduce the need for government to step in and make up the difference via welfare payments to your underpaid workers.

Of course that means each sandwich costs a little more. But if the principle of paying a living wage to all workers regardless of the work they do is totally implemented you business-people are doing exactly what you want: You’re making “big” government less necessary.

So paying a living wage to all workers regardless of the work they do should be a central goal of all true conservatives.

And of course also the central goal of all good busiensspeople.

This is not rocket science!

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