We Can’t Build Strong Economy On Weak Minimum Wage
[On Economic Recovery]
It didn’t take long after my husband and I opened our first hardware store in 2003 for people to start coming in and asking us to open in their neighborhood, too.
By 2009, we had grown to six Ace Hardware stores in Baltimore and Washington DC, with our seventh store opening in 2010 in Takoma Park, Maryland. The next year, Old Takoma Ace Hardware was one of four stores, out of 4,500 locally owned and operated Ace Hardware stores worldwide, to win the “Coolest Hardware Store” award from Ace Hardware Corporation.
We expanded further in 2012, growing from seven stores to nine with additional Washington DC and Maryland locations.
We may own the business, but we didn’t do this alone. Our growth would not have been possible without the help of our dedicated employees.
Paying fair wages helped our business grow fast to nine stores and nearly 200 employees even as our country suffered a terrible economic downturn.
Our starting pay for sales associates is $10. We know that gradually raising the minimum wage from $7.25 to $10.10 an hour makes good business sense. Raising pay at the bottom is good for the bottom line in key ways:
When employees earn a decent starting wage, they can concentrate on their job without continual stress over how they are going to afford basics like rent, groceries or transportation.
Businesses like mine count on good customer service, and good customer service depends on employees who are treated fairly and invested in our business. Our employees know we value them, and we know they value our customers.
Satisfied customers don’t just keep coming back themselves, they tell their friends and families about us. Paying better wages helps us attract and retain good employees, increase sales, expand our business, and hire more employees.
When the minimum wage goes up it puts money in the paychecks of people who most need to spend it – from making rent to buying things they could not afford before from the grocer, the pharmacy, the shoe store, the auto repair, and, yes, the hardware store.
Local businesses depend on local customers with money to spend. A higher minimum wage means more money circulating in our local economy. Our employees shop at other businesses, and the employees of other businesses shop at our stores. A higher minimum wage is a boost for our local tax base as well.
Too many large companies pay wages so persistently low that many of their employees have to turn to food banks or food stamps and other public assistance for the most basic essentials. This means companies that could pay higher minimum wages, but aren’t, are being heavily subsidized by taxpayers.
Moreover, when the minimum wage stays too low, the gap between companies like mine that are trying to do the right thing and the larger companies that are paying as low as they can, gets greater and greater. A growing gap makes it harder for businesses like mine to compete.
There’s no reason for businesses to be paying a minimum wage of just $7.25 an hour – $15,080 a year for full-time work. After all, that’s the same minimum wage that businesses paid in 1950, adjusted for inflation. This is 2014, not 1950.
Between 1950 and 1968, the minimum wage increased in real inflation-adjusted value, giving us stronger ground to anchor our income ladder to the middle class.
But since 1968, the minimum wage has been allowed to lose about a third of its value, leaving even full-time workers in poverty and the rungs of the middle class further out of reach for a growing number of working families.
We need to raise the minimum wage so full-time workers can get out of poverty and we can rebuild the consumer demand that drives our economy.
As a business owner, I support the proposal to raise the minimum wage to $10.10 by 2016, and then adjust it annually to keep up with the cost of living. Indexing the minimum wage to the Consumer Price Index will make wages much more predictable for businesses.
Better wages at the bottom helped my business succeed. A better minimum wage will help our nation succeed.
Gina Schaefer is the owner of A Few Cool Hardware Stores, a group of nine Ace Hardware stores in Washington DC and Maryland.