Friday, November 17, 2017

Column: Minimum wage increase to $8.25 is fine, to $15 is not


Florida's Department of Economic Opportunity is expected to announce Friday that the state's 2018 minimum wage will rise to $8.25 an hour.

For small businesses like mine, such a moderate wage increase poses little operational difficulties. What worries me is the growing activist-led statewide push to nearly double the minimum wage to $15. This wage floor would have a devastating impact on small businesses like mine and the people they employ.

Potential Florida gubernatorial candidate John Morgan has made a minimum wage increase in the $15 range a centerpiece of his nascent campaign. Even if he decides not to run for governor, he has vowed to put such a policy to voters in the form of a 2018 or 2020 ballot measure.

I can tell Morgan from firsthand experience that his legacy would be fewer small businesses and starter job opportunities in the state.

Consider my business, Nick's Pizzaria & Wings in Plant City. I'm not hard-hearted. I'd love to give my employees a raise. But it's simple math. My profit margin hovers around the restaurant industry average of 5 percent. Labor costs make up about one-third of my expenses. While I pay my experienced employees far more than minimum wage, if my entry-level labor costs nearly doubled under a $15 minimum wage, I would have no room to absorb it.

Minimum wage supporters sometimes respond to my argument by claiming the costs of minimum wage increases can be offset by menu price increases. But my customers are extremely price sensitive. If I raise prices to try to cover increased labor costs, some of my customers would go elsewhere — or simply choose to eat at home. Cutting product quality isn't an option, either — that may be the desired approach of some in corporate America, but it's not my business model.

Realistically, my only options would be to sell a business that no one would want to buy given the $15 wage rate — or close my doors.

My story is not unique. In a recent survey of Florida small businesses likely to be impacted by a $15 minimum wage, more than 1 in 6 respondents would have no way to operate in a $15 minimum wage environment and would be "very likely" to close or sell their stores. (I was one of those surveyed.)

These aren't job opportunities that many communities in Florida can afford to lose. In Plant City, over one-third of young people aged 16-24 are unemployed, according to Census Bureau data. These young job seekers are missing out on more than just a job. I teach my employees vital soft skills like customer service, a sense of urgency and the importance of teamwork that can help them throughout their careers.

Morgan says he's 100 percent certain he'll put a minimum wage amendment in the $15 range to Florida voters. My story and those of other small businesses like mine should give him and his supporters pause.

James Sparks is the owner of Nick's Pizzaria & Wings in Plant City.


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