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January 27, 2021

The Dark Reality of Loving a Quick & Easy Bargain.

Rethink the big-box mentality.

And so it begins anew.

As President Biden takes the helm, one of his talking points on the $1.9 trillion COVID-19 relief package contains the language revisiting raising the Federal minimum wage to $15 an hour.

Mr. Biden also issued a second executive order to improve collecting bargaining power and protections for federal workers, and direct the Office of Personnel Management to develop recommendations to increase the minimum wage for federal employees to $15 per hour.”

Minimum and low-wage workers are once again hopeful that this will happen under this new administration, but once again, there is pushback from employers.

I understand both sides of this debate having been an employee and also an employer. And really it boils down to one hurdle.

Consumers must lose the big-box mentality. 

As an Employee

The struggle to feed the family, pay the bills, and stay afloat financially is a daily battle as one or more sacrifices must be made to do so. Take on a second (or third) job to ease the tension, but we lose valuable family time or even parental authority over our children because we are not there to guide them. Buy new tires for winter, or just replace the one that blew out? Pay a repairman to fix the hot water heater, or see if the neighbor can help in exchange for a home-cooked meal? Get energy-efficient windows or just tape up the drafty ones and hope and pray for a mild winter. Seriously—the “duct tape” stories were invented from pure necessity.

I was a single mother with one child (and no help from her dad until she was 12), trying to support us both. Even when her dad started pitching in, it wasn’t really enough. I had, at one point, three jobs to try to keep above water…and I still qualified for government help because I was paid minimum wage or just above.

I remember one day, my daughter was sick with a stomach bug and I kept her home from school. I also called off work (which I never did) to take care of her (and to be honest, get something of a break myself). Instead of compassion, I was met with, “Are you sure? I have 10 people in line for your job.”

This is a common scenario for low-wage employees. We are forced to choose between caring for our families (even one day!) and possibly losing the employment we so desperately need to survive.

As an Employer

I was a small business owner for the last 12 years. I ran a housecleaning service. If you’ve ever done this work, you know it’s hard, physically demanding, labor. After 30 years of it, my body can tell you some stories. Thankfully, I’m still walking upright.

Imagine the day(s) you do the spring cleaning with the family. Now imagine doing that every day, at least twice a day, five days a week. You’d be dead, right? If you’re not, you’d want damn good money for doing it? Right? Right?!

This is what I was up against as an employer. I knew the work was hard and thought that my employees deserved a much-higher-than minimum wage for even considering this way of earning a paycheck. People are gross! On the occasion that someone was OCD about their home, it was equally difficult to achieve quality work, because the homeowner was super picky and counted dust particles after we left.

But here’s the rub. A not-insignificant number of homeowners who want to hire housecleaning services don’t want to pay what it would cost for the professional cleaning, including fair wages ($15-20/hour) background-checks, training, full insurance coverage, and done in record time, at their convenience.

I would calculate all this and give them a price. I can’t tell you the shocked looks I got (and this was when minimum wage was $8-10/hour in my state). Some were able to disguise their disbelief, while others got quite dramatic. Seeing this, I would ask how much they had budgeted for the job. It was often a fraction of the price I had just told them, hence the alarm. If they had to “talk it over with their partner,” I knew the job was lost.

The Chasm of Misconception

In my opinion, there is no excuse for large corporations to not pay their people living wages or better. Shareholders be damned. But small business owners groan when minimum wage laws are discussed. Truly, it’s not because we don’t want to pay our people more, it’s that consumers don’t want to pay us for our work or products. There is a myth that entrepreneurs are rolling in money just because we own a business. Hell, most of the time, we, as owners, are lucky to pull a little income from it, if at all.

Small businesses account for the vast majority of jobs in this country, yet it’s the corporations that rake in the most money. Why is that?

Well, if both a small business and a large company make a 10 percent profit margin (don’t laugh, this is just an example), 10 percent of $1 million is more than 10 percent of $150K. Because United States tax law favors big business, it’s the little guys that end up paying full tax liabilities because they don’t “make enough” to take advantage of the loopholes. Like personal income taxes, there are also tax brackets in business.

There is a level that I like to call “purgatory” that keeps small businesses in a never-ending vortex of high tax rates and low-profit margins. It’s like we have to prove we want to be in business so there is this gauntlet of taxation, fees, and sacrifices to go through. Trump’s “tax cuts” added up to $600 for me in 2019. Wow.

Small businesses often must pay for supplies and inventory with credit cards, which are not fully tax-deductible, unlike corporations that can count these as line items because they have the cash to pay for them. With each added dollar to wages, the Workers Comp and Liability Insurance, payroll taxes, and other benefits also rise proportionately. To offer health insurance, the business must be able to pay for their portion of the premium for each employee and the employees must pay their portion. If they are paid around $8-10/hour, they can’t afford that either. They’d rather have the money in their pocket than have the “luxury” of health insurance.

In 2020, the cost of group health insurance averaged $14,563 annually (nearly 71 percent of the premium) to cover a family and $5,946 (almost 83 percent) of the premium for an individual.”

This is way out of reach for many small shop owners who run (in actuality) on the edge most of the time. And heaven forbid if there is an equipment failure or some sort of insurance claim…or a pandemic.

Consumers don’t understand that they cannot absorb even some if not all the overhead required to pay people a living wage—the money has to come from somewhere.

Lose the Big-Box Mentality

We all love a bargain! But we have been trained to shop at chain mega-marts to get the best deal.

I’m just as guilty as anyone else. I try to support local shops. The other day, I was buying replacement hinges for my kitchen cabinets, so I went to a (smaller) chain hardware store nearby. They wanted $9 each. Instead of buying them, I went home and shopped at everyone’s favorite online retailer and found I could get exactly the same thing for 75 percent less. I just had to wait two days. Guess where I bought them?

Now, while my purchase won’t run anyone out of a job, when millions of us do this same thing, it will. It has.

I don’t know a single person who thinks a $15/hour minimum wage is unreasonable. Until they have to pay a company for a service they need. Whether it’s a housecleaner, or a restaurant, or a hot water heater repairman, we need to value the training and knowledge that they have to perform the service you want. With all the recent bluster about China, when paying for a product or service, you will have to make a choice. Clean your own house or pay someone an adequate wage to do it for you. Pay the restaurant for a memorable meal, or stay home and cook for ourselves. We all value our own work, why doesn’t someone else deserve the same?

A line I used to use on overdue invoices said this:

Please pay us, so we can pay them, so they can pay you!

Everybody Benefits

Sure, it hurts to have to pay more for something that we used to get for less. But think about when you bought a new(er) car. It ran better. The tires were new. The A/C worked. You knew you could go anywhere safely. That peace of mind was worth it. You relaxed.

It’s not surprising that mental health crises often happen concurrently or because of financial crises. People who make enough money to support themselves are less likely to go to work sick (yay!), are more productive and happier at work, they are happier at home, and can spend more money in your store.

With everyone anxious about getting the economy up and running again, raising the minimum wage is one of the fastest ways to kickstart it. It would be like a monsoon on a parched savannah. If your state doesn’t have a $15 per hour minimum wage, please call your Congress people and get them on board.

It’s time to share the love.

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