Dear State Legislators, Can You Do The Math?
JOHN M. DERBY
January 12, 2017
say we have 20 employees (actually we have 22 full and part
time employees at this time).
Each time the state increases the minimum wage by $1 and
hour, its costs the company $20,000 a year. (20 employees
at an average of $1,000 a year per employee.)
Note, the state has already increased the minimum wage by
$2.50 in the last three years, costing our company and additional
$50,000 a year and this was during the recession.
Without any increase in the number of employees, the state
demands that we increase the minimum pay by another $4.50
to $15 an hour. Now there is no way that we would increase
the pay of the employee at the lowest wage level in the
company without increasing the wage for all the other employees
who make more than the minimum wage.
This means by the time we reach the $15 an hour level, our
business will have an added $140,000 a year in wage expense.
Our company only had a gross income of $750,000 in 2016,
and one third of that was spent on wages. In order to increase
the wages by $140,000 the company will have to generate
$420,000 more business.
Where does this come from?
One alternative is to mechanize, however, that will actually
costs jobs. So how does that benefit our employees? We could
raise the prices for our product which is LOCAL NEWS; not
something which people are forced to buy, however, it becomes
more important as we see the Internet now being faced with
The State Legislators, in their wisdom, failed to take into
account the different levels of income in different areas
of the state. While the $15 an hour minimum wage may not
be outrageous in San Francisco, there is a world of difference
in the pay scale in Merced and Stanislaus Counties and the
big cities of California.
We see as the problem, the State Legislators, in most cases,
have not spent one day running a business. If they had,
then their solution to increasing wages in California would
Instead of attracting industrial jobs to the state, they
force the industries to move out of state so those industries
can be competitive.
Big business doesn’t care where it locates. We have
seen that in the drift of so many big businesses to build
plants overseas or over borders.
What benefits does the State of California offer for doing
business in this state?
The problem affects small businesses most, because they
are the ones who employ the most people. They are also the
ones who will feel the brunt of the increase in minimum
From what we have seen, oftentimes the employer will just
put in more hours, himself or herself, to survive. When
a business increases the wage and reduces the number of
hours their employees work, the net gain for the employees
For those employers unwilling to make the sacrifice, there
is one final alternative and that is shut the door.
Macy’s has shown us how that is done.
Now we ask one more time: “Legislators, Can You Do