Op-Ed By Bill Phelps
Forbes, August 3, 2016
We’ve all heard people bemoaning California’s new $15 minimum wage law. Theoretically, they say, it will result in job losses, and employers won’t be able to afford increased labor costs. I’d like to give my business perspective and look at the real impact of minimum wage increases.
As the CEO of Wetzel’s Pretzels, a company with more than 3,000 employees system-wide—many of them in California—I’ve paid very close attention to our business as California has raised the minimum wage over the past couple of years. And what I found was stunning.
When California increased the state minimum wage from $8 to $9 an hour in July 2014, our same-store sales doubled in the next two weeks and stayed that way for six months. When the minimum increased again in January of this year to $10, the same thing happened; our same-store growth rate more than doubled. In fact, I recently received an email from a multi-unit Wetzel’s Pretzels franchisee who said his business has never been better and he’s convinced the minimum wage increase has a lot to do with it.
The minimum wage is now set to gradually increase to $15 an hour over the next six years. As a business owner, am I worried about this increase, you ask? No, I have seen two increases in the past 24 months and our business has never been better. ...
I understand business owners being concerned about an increase in labor costs. But the new wage will be phased in over six years – reaching $15 in January 2022 – giving them time to adjust. Small businesses with 25 employees or fewer will have until 2023 before reaching $15. There are also provisions in the new law that would provide flexibility on the timing of those increases in the face of an economic downturn.
In the meantime, the increased cash circulating in the economy will go a long way in offsetting the higher hourly minimum. And businesses will see other offsets as well, such as reduced employee turnover and increased productivity.
I am also a proponent of increasing the federal minimum wage, which hasn’t been increased since July 24, 2009. I think that all workers deserve more than the current $7.25 an hour federal minimum wage and that the minimum wage should be increased more than once in seven years.
Workers in California and other states are looking forward to consistent pay increases in the future. And I’m looking forward to continued growth for our business.
Bill Phelps is the co-founder and CEO of Wetzel’s Pretzels
Copyright 2016 Bill Phelps