Failure To Enact A Living Wage Will Hurt Businesses
Originally published in Honolulu Civil Beat, February 19, 2019
Russell Ruderman & Tina Wildberger?
Small business owners and Hawaiʻi State lawmakers
One of us started a small business, Island Naturals Markets, on Hawaii island over 20 years ago that has created more than 200 higher-than-minimum wage jobs. It has thrived under difficult economic conditions and its founder and president has been recognized as the 2015 SBA Businessperson of the Year.
The other bought a small business, Kihei Ice, on Maui 19 years ago. She and her husband have created 15 higher-than-minimum wage jobs, thanks to the loyalty of employees who feel recognized for their contributions.
We are both also lawmakers who are deeply concerned about the conversation underway about a living wage. We offer a few reminders.
One. Describing a minimum wage as a “training wage” is a distortion of what President Franklin Delano Roosevelt envisioned when he signed into law the Fair Labor Standards Act. He said, “Do not let any calamity-howling executive with an income of $1,000 a day, who has been turning his employees over to the Government relief rolls in order to preserve his company’s undistributed reserves … tell you that a wage of $11.00 a week is going to have a disastrous effect on all American industry.”
That was in 1938. Today, as business owners, we pay our employees more than the state-mandated minimum wage because that is what it takes to attract good people in the first place — and retain them. The economies of New York, San Francisco and Seattle which have moved to $15 an hour are thriving. New Jersey has just joined them. Paying a living wage motivates people to perform well, deliver better customer service and bring in more business. It also reduces the cost of hiring and re-training workers when underpaid employees leave for better paying jobs.
Two. We understand businesses wanting to be sure their employees are performing well enough to warrant higher wages. So, stipulate an initial probation/training period and assess their performance. But don’t argue that when you hire a janitor in his 40s or 50s that you need to pay him less than what he needs to meet basic needs because he is “in training.” Maybe he will become a mid-level executive someday, but meanwhile he needs to eat, have shelter, and feed his family. He cannot do that on $10.10 working full time — and often not even if he has a second job.
Three. A living wage — which the state Department of Business, Economic Development and Tourism estimates to be higher than $15 — will not hurt business, cause prices to skyrocket and put people out of work. Struggling workers will pump the little extra money they get right back into the economy. What FDR said in 1938 about establishing a minimum wage is also true about enacting a living wage today in this terribly expensive state: “Without question it starts us toward a better standard of living and increases purchasing power to buy the products of farm and factory.”
Businesses increase their prices for their products all the time. Why shouldn’t workers expect wages to go up as well? We also hear the threat of increased automation if wages go up. But automation is already occurring — with or without wages being raised.
Business groups like to talk about personal responsibility. Why then do they cling so tenaciously to the idea that taxpayers and the state must subsidize the cost of labor, and pay for the fallout from poverty and growing houselessness? The current state of things is untenable. As lawmakers we have exactly one tool that will lift hundreds of thousands out of poverty: enact a living wage. It is unconscionable to not do so.
As businesspeople we invite others to join us in doing the right thing and stop opposing giving workers what is their due: a just living wage. As lawmakers, we can do right by working families. If we have the will.