What changes to the minimum wage mean for small businesses in America
The minimum wage is set to increase in 20 states, affecting millions of workers. But how will this forced pay increase impact business owners?
Democrats in Congress are holding a hearing today on a proposed bill to raise the minimum wage to $15 an hour. They will try to make the case that doing so is good for workers and for small business owners. But my experience as a small business owner in Seattle – a city with a $16 minimum wage for large companies and $15 for all other businesses – has proven the exact opposite.
My husband and I independently own and manage two Subway franchises in the greater Seattle area. One location is in Seattle proper; the other is eight miles away in the city of Kirkland.
Even though we're the very definition of a small business, as a Subway franchisee, the city of Seattle considers us a "large business." That means our location in the city is forced to pay workers the higher wage of $16 an hour.
Next year, in March 2020, we will, unfortunately, have to close our Seattle location due to the city’s mandated minimum wage. If our experience in Seattle is any indication of the pitfalls of a $15 minimum wage, I implore Congress to carefully consider the ramifications of the proposed legislation.
My husband and I are firm believers in creating a strong foundation for our staff, many of whom are new to the workforce. We believe in paying them an appropriate wage for their skill sets and responsibilities. While there was a lot of excitement for workers when wage increases first were announced, sadly, raising the minimum wage has not benefited our employees as our local government intended.
My husband and I are firm believers in creating a strong foundation for our staff, many of whom are new to the workforce. We believe in paying them an appropriate wage for their skill sets and responsibilities. While there was a lot of excitement for workers when wage increases first were announced, sadly, raising the minimum wage has not benefited our employees as our local government intended.
Seattle’s rapid minimum wage increase forced us to drastically cut our expenses in order to continue running our business efficiently.
We were forced to terminate four of our seven employees since we simply could not afford the new costs of labor. We then shortened our business hours to accommodate this reduced staff. Employees’ hours were cut, and their shifts were changed to concentrate on staffing our peak hours.
These changes occurred rapidly and led to an immediate drop in team morale.
A federal $15 minimum wage will not only lead to job losses across our nation, but will cause small business owners to lose sight of the American dream, as they are forced to make difficult decisions in order to maintain their businesses, or close altogether.
Because of the higher wage mandate, we can no longer hire and train unskilled high school and college students who are new to the workforce. We used to value teaching our first-time employees basic life and customer service skills, like handling cash, punctuality, cleanliness, conflict resolution, organization, and how to conduct themselves professionally and responsibly.
This is a valuable part of becoming a thoughtful and contributing member of our workforce and society. But that foundation and stepping stone are being removed thanks to the minimum wage mandate. Today, we are forced to hire employees with more experience to compensate for a smaller staff and higher wage requirement.
Higher wages have also translated into higher prices. Over the past two years, it has been both frustrating and disheartening to lose longtime customers, as we try in vain to raise our prices to offset costs. Not every neighborhood in Seattle is a wealthy one. Our Seattle Subway is in a middle-class area where customers are price sensitive – especially since they can visit a nearby Subway over the city border and pay a lower price.
Heidi Mann and her husband
Our customers have also been burdened with longer wait times, as we often have to train our employees to be full-service, from greeting, to taking orders, to making the food and collecting the payment – not to mention prep, cleanup and lobby care.
The wage increase is putting pressure on everyone. It’s hard, and it’s frustrating.
We started this business believing in the American dream, but our dream of being our own boss, of earning a fair wage for our family, and of helping others through meaningful employment, is slowly becoming a pipe dream that is less and less a reality.
We started this business believing in the American dream, but our dream of being our own boss, of earning a fair wage for our family, and of helping others through meaningful employment, is slowly becoming a pipe dream that is less and less a reality.
As each piece of the higher minimum wage is phased in, the American dream is becoming more elusive and unattainable. We are all working longer days, with more responsibility, and, in the end, for less pay, despite the increases.
Small business owners make America strong. They are the heart of our economy and they are responsible for raising a solid workforce as their employees navigate into careers and higher paying positions.
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A federal $15 minimum wage will not only lead to job losses across our nation, but will cause small business owners to lose sight of the American dream, as they are forced to make difficult decisions in order to maintain their businesses, or close altogether.
I hope Congress will listen to the voices from Seattle, where a $15 minimum wage is disrupting our small businesses and our economy.
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