The new minimum wage law will be a hardship on small-business owners in food service, day care, amusements, or any company that hires entry-level workers. Most of those employees are part time or seasonal, with no previous skills or experience. There is a market value for what an employee contributes, and beginner employees aren’t likely to be worth $15 an hour.
Small-business owners face even higher increases in labor costs because they must raise pay for existing employees who make just over the minimum to keep up morale and productivity, and payroll taxes also go up. Where do they find the money? Raising prices could turn customers away, especially if it is a choice of dining out, entertainment, or buying something. Hospitality businesses have profit margins around 1 to 2 percent, so the belt can’t be tightened. The only remaining choice is to eliminate entry-level jobs and cut hours.
The editorial repeatedly references the federal minimum wage of $7.25, but Maryland’s hasn’t been at that level for a decade. This new law saddles these small businesses with a 48 percent increase in labor costs coming on the heels of a 39 percent increase over the last four years. Few hospitality businesses qualify for the paltry 18-month extension to raise the wage to 15, as many restaurants, day cares, and others have more than 14 workers — many of them working only part time.
There is a tipping point and we will now reach it. These jobs are vital to our state’s economy. Employees will be hurt, not helped, especially those who need that first job to learn important lessons about showing up on time and learning about the work world.
State director, National Federation of Independent Business