As part of his $1.9 trillion economic stimulus package, President Biden proposed an increase in the federal minimum wage, the first since 2009. Currently at $7.25, many states have opted for higher minimum wages. (Pennsylvania’s currently remains at $7.25, despite dogged efforts from Governor Tom Wolf to raise it.)
The Biden Administration says setting a $15 an hour minimum rate by 2025 is essential to narrowing America’s inequality, but the issue has emerged as a flashpoint with opponents arguing that it will increase loss of jobs.
The Inquirer tapped a Philly business owner and the head of the Chester County Chamber of Commerce to debate: Is it time for a $15 federal minimum wage?
Yes: Paying employees a living wage is good business
I’m a small business owner, and I strongly support raising the minimum wage to $15. Paying employees wages they can live on is good business.
I own La Barberia, a full-service barbershop with locations in Philadelphia and Jenkintown. I know that if my employees aren’t happy, my customers won’t be happy.
It’s very important for us to have a stable staff without a lot of turnover. Customers count on seeing “their barber” when they come in. We don’t want barbers leaving to make 50 cents or $1 an hour more elsewhere.
The Pennsylvania and federal minimum wage of $7.25 an hour comes to $15,000 a year for full-time work. I can’t imagine paying anyone $7.25 an hour. It would send the message to employees that I don’t care about you — or our customers.
At La Barberia, employees are our most important asset. We pay a decent salary that respects the craftsmanship and work ethic of our staff. Many of our employees have been with us for years, some for 40 years.
“We don’t want barbers leaving to make 50 cents or $1 an hour more elsewhere.”
Some small business owners might call me lucky. But I call it smart business.
Employee turnover is disruptive, expensive and inefficient. Constantly hiring and training new staff slows down your business and costs time and money. It undercuts customer service.
With better pay, our employees stay with us, providing the great service that keeps our customers coming back and recommending us to others.
When the minimum wage goes up, businesses will see costly turnover go down.
Raising the minimum wage will also put more money in the pockets of local people, who spend it at local businesses like mine.
As I like to say, you can’t spend it if you don’t have it. If you work full-time and can’t afford basic necessities like food and rent, you’re probably going to skip your haircut.
I support legislation being debated in Congress that would incrementally raise the federal minimum wage to $15 by 2025. In fact, I’m one of hundreds of business owners in Pennsylvania and across the country who has signed a Business for a Fair Minimum Wage statement supporting an increase to $15.
The minimum wage has been stuck at $7.25 since 2009 — the longest period without a raise since the minimum wage was first enacted to help workers, businesses and the economy recover from the Great Depression.
Pennsylvania’s neighbors all have minimum wages higher than $7.25. Maryland, New Jersey and New York are on their way to a $15 minimum wage already.
Before the pandemic hit, the Federal Reserve Bank of New York compared counties along both sides of the New York-Pennsylvania border to see the impact of New York raising its minimum wage while Pennsylvania stayed stuck at $7.25. They looked at two industries with many lower-wage workers: retail trade and leisure & hospitality.
Contrary to what opponents of raising the minimum wage claim would happen, they found that wages went up in New York without negative effects on employment compared to Pennsylvania.
Raising the minimum wage will increase wages for many essential workers who aren’t paid enough to cover their essentials. It will boost the customer spending we need at businesses like mine.
Raising the minimum wage will help us recover from the pandemic and strengthen our economy and our Commonwealth.
Michael O’Connor is the co-owner of La Barberia, with locations in Philadelphia and Jenkintown, and a member of Business for a Fair Minimum Wage.
No: Mandating $15/hour will kill jobs
You might have thought that campaign-season was behind us. You would be wrong. Sadly, we are now in a 24/7/365 cycle of politics, virtue-signaling, and wedge issues. Enter: “Raise the minimum wage to $15!”
This comes from many of the people who brought us other wealth-transfer schemes like “cancel-student-debt” and “let’s raise taxes on business.” This is bad economic and social policy. Many of the proponents know this and yet use it to bludgeon their political opponents—trying to show them as heartless. And other proponents are so ignorant of basic economics and small business that they shout out these bad policies without a clue as to the real impacts.
This is even worse today with COVID-19, government-imposed lockdowns, and the recession that feels like a depression for our hospitality industry and many small businesses. Mandating that the minimum wage be raised to $15/hour—double the current rate—actually harms many of the people who are to be helped.
If Congress doubles the minimum wage, the Congressional Budget Office’s (CBO) analysis shows that for about every person who might be lifted out of poverty, there are 1.2 people who would lose their jobs. The CBO is like an umpire—you may not like the “call,” but there’s no bias there.
“This is a feel-good proposal from people who often don’t really care about those struggling.”
Due to the lockdowns, many people have lost their jobs and others have had their hours and/or salaries reduced. Mandating that their bosses pay them more doesn’t really help them. In fact—as the CBO stated—many will lose their jobs.
And, those making lower-hourly wages often work in the struggling hospitality field—catering, restaurants, bed & breakfasts and hotels. Where exactly would those managers find this “magic money” to pay $15/hour? The reality is that many would close down and many others would have to fire staff to pay the others.
In addition, when the government mandates that the new minimum wage is $15/hour, those already making $15 or $16 or $18/hour will ask for a raise. This adds even more financial pressure to small businesses.
Sadly, this is a feel-good proposal from people who often don’t really care about those struggling. They care about vilifying their political enemies. According to the Bureau of Labor Statistics, only 2% of employees make the minimum wage, and almost two-thirds of them live with their parents. This push is about politics, not truly helping people.
If you want to help small business, don’t mandate even more expenses to further bury them in debt and despair (and, don’t raise their taxes, Governor Wolf). To help those whose hours or salaries have been cut, take the direct route. Safely re-open businesses, reopen schools, and help us all to get back to normal life. Then, we can discuss reasonable, incremental increases.
Policymakers who truly care about helping those left behind or those at the bottom of the economic ladder should stop advocating misguided wealth-transfers. You don’t make Jack wealthy by taxing Jill. You don’t make Joe and his colleagues wealthy just by ordering his boss to raise their pay by 25% or 50%.
True help should focus on common-sense, empowerment, and increasing opportunity. Reopen the economy. Reopen our schools. And encourage companies to open up and grow. Stop redistributing the “pie” and help make bigger pies—and start welcoming more pie-makers.
Guy Ciarrocchi is the CEO of the Chester County Chamber of Business & Industry, and a regular contributor to Broad & Liberty.