The U.S. House of Representatives passed legislation to raise the minimum wage to $15 per hour. This reminds me of the saying, “Nothing is impossible if someone else has to do it.”
Clearly, our representatives won't be paying the wage, and all the increases will be visited upon the employers of our country. For the larger ones, this will be less onerous than for the small employers who are the backbone of our country's economic engine.
Let me qualify our bona fides on this issue. As small business managers, we want our employees to earn at least $15 per hour for a number of reasons. We desire our associates to make an affordable wage because it's the right thing morally and economically. A better paid employee is hopefully more satisfied and productive and that mindset can lead to our company's continued success.
As with many small businesses, the ratio of pay between the lowest paid associate and our executive team is far narrower than the pay differences that exist in large businesses. In fact, the aggregate pay of all our executives is less than 15 times our lowest paid employee. That means the pay structure is narrow and equal and that the executives are not plundering the resources of our company to the detriment of our lowest paid employees.
To be blunt, none of us are getting rich here, and that's OK since we see the value of our service and the importance of our endeavor's success. All that expressed, to simply legislate and increase in pay without any increase in productive output will severely hamper, if not destroy, small businesses in America.
Unlike larger businesses, small ones are working close to the bone in staffing and aren't easily able to make adjustments to employee numbers. We know our associates and often times their families and shedding one or two to support mandated wage increases is painful.
Productive output in our economic system leads to increased pay and that increase returns justifiable value to a company's future. I can almost guarantee that businesses of all sizes will greet any arbitrary increase in the minimum to $15 per hour with a rationalization of staff — i.e. layoffs — and automation of all low skill job functions.
If you go to Sheetz, you can see the future of order entry in the food service and related businesses. Since small businesses can't make that transition easily, and the pressure on their operations will be disastrous. If the politicians would modify their pandering, the system can take care of its own.
A good example of that concept is the following. As our company expanded its operations, we fortunately were able to increase customer base and order size to require the need for much larger delivery trucks. Because the size of those trucks required a commercial driver's license, our staffing had to include drivers with a CDL and a work load segregation that freed those drivers to delivery activities alone.
Many companies also needed CDL drivers, so the net result was that these associates, with the skill sets involved and the related certification, drove wages up significantly and they now command wages that are among our highest. Since they are delivering payloads that justify that wage, our company can compete in that job market. This organic cause and effect relationship is a win-win for all concerned and is both sustainable and rewarding.
We have an additional concern as it relates to our current employees now above the suggested minimum wage. They now see their value expressed concretely against the current minimum wage. Will they naturally want that relative value to exist over the new minimum wage? Without an increase in production and incremental skill set enhancement, will small businesses meet this relational problem? It will be difficult if not impossible.
I asked my father once about what he thought of a mandated large increase in wage and his response was interesting and valid: “Anyone who wants to wildly raise the minimum wage has never made a payroll out of his own pocket.”
I guess he was right. To repeat, “Nothing is impossible is someone else has to do it!”
Gary DeSantis is a Meadville resident and author of a book titled “The 6th Floor.”