Raising the minimum wage is good for small businesses

 Ken Weinstein owns the Trolley Car Diner in Mt. Airy. (Emma Lee/WHYY, file)

Ken Weinstein owns the Trolley Car Diner in Mt. Airy. (Emma Lee/WHYY, file)

Last week, NewsWorks published an article about a recent report from the Independent Fiscal Office which suggested that the positive impact of increasing the minimum wage is relatively minor (“Gov. Wolf’s minimum wage plans run into economic reality“). As a small business owner, I was surprised by this conclusion. Small businesses, and their employees, will benefit over time from higher wages. And increasing the minimum wage has a positive ripple effect throughout our entire economy.

Pennsylvania’s minimum wage remains stuck at just $7.25 per hour, the lowest possible under federal law. That’s so low that even a full-time minimum wage employee is trapped in poverty. This is an outrage, yet lawmakers appear to be in no hurry to increase the minimum wage. The lack of action by our state and federal lawmakers is infuriating. That’s why I recently founded Wage Change, a group of small businesses throughout Pennsylvania that are committed to paying their employees above the minimum wage. We aren’t waiting for Harrisburg or Washington, D.C., to take action — we’re doing it ourselves.

Some might find it surprising that small-business owners are voluntarily taking action to increase wages. But you only need to look at Wage Change’s explosive growth in less than four months of existence to see there is strong support for increasing the minimum wage among small-business owners. I originally started the organization in January with just nine other businesses. We’ve already grown to almost 50 diverse businesses, including restaurants, coffee shops, retail, tech companies, and manufacturing.

So why do so many small businesses support increasing the minimum wage above $7.25/hour? There are a number of reasons:

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Increased employee retention & productivity. Let’s be real — the current minimum wage of $7.25/hour is pathetic. That’s just $15,080/year for a full-time employee. Is it any wonder that minimum wage employees are rarely motivated to stay at the jobs? Small-business owners can retain their employees by paying higher wages, and everyone knows that experienced workers are the most productive.

Less training and recruitment. Higher wages will lead to less turnover. Turnover among employees can be incredibly expensive, because every new employee needs to be trained for their specific job. This is true for every kind of business, from a coffee shop to a software development company. Every dollar spent on training new employees is a dollar that could be invested on improving a small business. Less turnover also allows supervisors to spend less time recruiting and hiring new employees so they can focus their time on satisfying their customers or clients.

Better morale and customer service. Higher pay means higher employee morale. Higher morale means a more positive work environment, which increases productivity and quality of service. It also makes employees feel valued and committed to their jobs, which has a positive impact throughout the operation. It’s also vitally important for businesses that rely on a high volume of customer interaction, such as retail or restaurants. Customers are more likely to return to a business with happy employees and higher quality.

Increased purchasing power. Small businesses rely on the strength of the local economy to be successful. Increasing the minimum wage puts more money in the pockets of our employees which, in turn, is likely to be spent at local businesses. Here’s the reality: Lower-wage workers are not going to stash their paychecks in an off-shore tax haven. They’re going to use any extra money on rent, food, clothing, and other necessities. In short, increasing the minimum wage pumps money back into the local economy in a way that clearly benefits small businesses.

Attract new customers. Consumers are increasingly shopping their values by spending money at businesses that support important social causes. At the same time, consumers are also punishing businesses that fail to honor their ideals. Increasing pay for employees and publicizing that decision is a great way to attract new customers to any small business.

These are just some of the reasons that many small-business owners support increasing the minimum wage. I am very proud to have co-founded Wage Change, and even prouder of the ever-growing number of small businesses that have joined our movement. Together we are sending a clear message to elected officials in Washington, D.C., and Harrisburg: We are tired of waiting for action on raising the minimum wage. We are taking direct action and encouraging others to do the same. Hopefully, lawmakers will notice our growing movement and decide to do the right thing for our employers, employees, and the economy as a whole by raising the minimum wage across the board.

Ken Weinstein owns the Trolley Car Diner in Mt. Airy and the Trolley Car Cafe in East Falls.

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