I’ve always been a proponent of paying employees the best I possibly can, while also providing as much in benefits as I could, even when in an extraordinarily low profit margin business environment.
It’s been one of my proudest accomplishments. It also contributed to the loss of a nearly $9M company.
In the mid 2000s, I owned a 200+ employee company, whose full-time staff all received health, dental and vision insurance at no cost to them. Almost no one started at minimum wage, and everyone got some kind of raise every year, even if it was only a cost of living increase.
I no longer remember the numbers but it went something like this: the annual raises cost the company around $150,000 a year. Health insurance was about $800,000.
When a series of challenging events arose, the cascading impact of addressing those events at the same time as trying to get a handle on expenses the company could no longer bear became, well… unbearable.
I wasn’t strong enough – tough enough – to freeze wages or shift part of the cost of that health insurance (which amounted to nearly 9% of our total annual income) to the employees. So instead of all of us feeling a little financial hurt, we all lost everything. The company closed, suddenly, dramatically and in all the media.
And what does this have to do with the latest increase in the minimum wage?
It’s just an example of one business owner’s struggle with a burning desire to do right by my employees, while trying to run a business in a 1% profit margin field.
Given my experiences, do I think raising the minimum wage from $7.50 per hour to $12.00 over the past few years was the right thing to do? Yes, I still do, but man, I know how hard it’s been hurting and will continue to hurt those companies in low margin businesses.
You know, the small local retail businesses owned by your neighbors. The corner store. The resale shop. The only bookstore in town. The artist. (And of course, don’t forget the service businesses such as bookkeepers, musicians, and others; they need your support as much as anyone.)
Support your local small business, even if it costs a bit more. Stop giving money to the Amazons and Walmarts of the world, which do provide jobs but still make so much profit that the owners are among the richest humans on earth. They don’t need any more money. Many of your neighbors do.
The link to the article below is from today’s Portland Press Herald.
Categories: Business Practices