Let’s Do The Math On $15 Minimum Wage

By  John Derby
Times Publisher
April 28, 2016

We are a small business with 20 full and part-time employees.
When the minimum wage went up to $10 an hour, we increased everyone’s wage by $1 because we did not feel it was right to only increase those workers who were on the bottom rung of the economic ladder.
This cost to the company was an estimated $20,000 annually.
The company did not show a profit of $20,000 that year, so the employees were told that somehow the company would have to increase its income this year by $20,000 to pay for the raise.
While we have been able to raise part of that additional income, when one of our employees retires in June, he will not be replaced.
Now let’s look at the increase from $10 an hour to $15 an hour (not all at once, but when the increases are mandated by the state).
Each year the increase takes place it will add an additional $20,000 cost to doing business. Either that or we will have to lay off one of our staff, which we prefer not to do.
So the first year of additional raises will cost $20,000, and the next year it will go up to $40,000, and by the time we get to the $15-an-hour minimum in 2021, it will be costing the company an additional $100,000 a year to do business.
In a good year, our business will only make 8 percent profit. To pay for an additional $100,000 in wages, the company would have to generate 17 percent profit or over double what it has done in the past.
If those numbskulls in Sacramento can show us how to generate that kind of profit out of a business which has never been able to come close to that, then come down here and run this newspaper.
Otherwise, they need to learn how to run the State of California, so that it is fiscally balanced, and that hasn’t been done in years.
It seems like it is time for small business to march on Sacramento, and refuse to pay these increases; or at the very least prepare a measure for the ballot which will disallow the state legislature from mandating wage increases for the entire state, and leave this matter in the hands of the local cities and counties.
Clearly every city or county is different.
While it could be realistic to have one wage level in San Francisco and Los Angeles, where the cost of living is almost double what it is in the valley, there needs to be a different minimum wage for this valley, which is still suffering from the last seven years of recession.

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