A survey by the Employment Policies Institute found that 27% of owners say it is somewhat or very likely the forced pay hike will force them to close.
47% said the hike forced them to raise prices.
30% said the hike forced them to reduce worker hours.
17% said the hike forced them to lay off workers.
The institute told the tale of a few employers:
The owners — a husband and wife — started their business in 1990, sewing apparel for larger companies. Today, they subcontract for an apparel company based in San Francisco.
The company’s workforce historically consisted of the husband and wife, as well as five to six other employees depending on the workload. But when the minimum wage rose by 36 percent on March 1st, things changed.
The owner explained that, as a sewing subcontractor, sizable price increases to offset the cost were not an option. They’re in competition with other businesses in nearby cities who aren’t facing the same labor cost increases.
Their solution was to increase prices minimally, and cut staff significantly: Now, the business operates with 1-2 additional employees plus the husband and wife team, who are working from 9 am to 8 pm to keep the business running. They plan to continue this low-staffing arrangement for 6-12 months to see if it’s feasible – if not, they’ll re-evaluate whether to keep the business open.
The owner expressed frustration with the sentiment that all business owners have money to spare: “They think — you have your own business, you’re supposed to be making money. For small business, it’s not like that. It’s the owners who are doing the work.”Then there is the seafood restaurant:
The owner of this restaurant moved to Oakland in 1991. He moved outside of the city in 2010, but maintained his connection to his old neighborhood, and decided to start a restaurant in the city 8-9 months ago. It’s a sit-down restaurant that serves seafood; he staffed it with himself and three other employees. (Two employees served the customers and worked out front; the other two worked in the kitchen.)
Starting this business wasn’t easy, and there were a number of costs involved. “It’s not like I’m making a big profit,” the owner said. The situation became considerably more difficult at the beginning of March, when the minimum wage increased. The owner couldn’t absorb the higher labor costs, and raising prices wasn’t an option when he was still building a base of customers.
To cover the cost, he had to let two of his three employees go. Now, the business is run by himself and one other employee, plus his wife comes in to help at times. The owner said that he doesn’t know what he’ll do long-term, and that its possible he’ll close: He doesn’t like to be understaffed like he is, but he can’t afford to pay more employees at the new minimum wage.
He said he’d have more flexibility if the restaurant were an established business, but that expecting a new, small businessThis was what the minimum wage increase is all about: Eliminating small business. The Left opposes the middle class, which small businesses represent. In Left World, food stamps are good, paychecks are bad.