Several businesses came out to testify against the $15 minimum wage bill approved Jan. 24 by the Assembly Labor Committee, providing real-world examples that lawmakers need to hear.
Owners of summer camps, restaurants, auto-mechanics and gas stations all warned of the practical problems surrounding such a high minimum wage imposed across the board. Among them were Alli and Patrick O’Neill, who own a bakery. Here is their testimony as presented to the committee:
“This bill is supposed to be for employees, but employees and employers will be on the losing end if this bill passes. Small businesses cannot absorb this kind of increase of expenses. This bill will force at least one or more of the following situations:
- A high and steep rise in prices across the board
- Reduction in number of jobs and/or hours available for employees
- Increase in automation and computers replacing jobs
- Closing the business resulting in loss of jobs for employees and employers
“As for prices, this bill will 100% force a steep increase in prices for all goods and services. Businesses will need to compensate for the payroll increase as well as the expenses that are determined by payroll. Employer taxes and workers compensation will be raised significantly. ALL of these expenses will need to be considered when adjusting prices, not just the wages themselves. These adjustments will need to be made, not so we can buy our second vacation home, but to pay our bills and earn a living wage ourselves. As a bakery owner, I will use an example:
“If every other expense remains exactly the same over the next five years, donuts will increase to $21/dozen, just to keep the current profit level. So, if prices rise this high, can the employees even afford more than there were able to before? Likely, no.
“Business owners will also be forced to cut jobs and hours available to employees, again resulting in less pay, not more. Businesses may even need to reduce the hours or days they are open, just to get by. There will be no more cushion for employers and they will need to be strict on scheduling. This can also result in overwork of the employee as one employee will need to take on more work to compensate. Less hours, less jobs means less pay, not more.
“The automation trend has already begun. McDonald’s, grocery stores, even doctor offices are moving toward replacing jobs with computers. Passing this bill will create a wave of automation. Businesses will look to invest in the equipment to replace people because in the long run it will save them money. So again, there will be less jobs available on the market.
“Businesses, especially those that are just surviving now, will be forced to close. Many small, local businesses will fold, and it will be the end of small town Main Streets. As more and more close, both the employees and employers will be unemployed, in a market where jobs are already scarce.
“This bill is supposed to be for the people, but in reality, it’s the opposite. Employees will be paying more in taxes, have less hours available to them, have less job opportunities and won’t be able to afford any more than they could before because of the rising prices. Only the state wins. Wages increase by 69% over the next five years. Employer state taxes increase by 81% in those same five years. This bill’s only winner is the state.
“To address the different schedule for small and seasonal businesses, this bill will hurt those businesses by separating them out. Why would someone apply to a job where they will be paid less than anywhere else? It will be very difficult to get decent workers to apply to small and seasonal businesses, so the reality is that they are being hurt even further.”