Raising wages will help build strong local economies
Op-Ed By Angela O’Byrne
Biz New Orleans Magazine, September 2016
Building a successful business is not unlike building a physical structure. First and foremost, you have to start with a solid foundation. A business’s foundation is its employees. That’s why I believe in paying fair wages and why I support raising the federal minimum wage to a rate that people can actually live on.
Our country’s minimum wage, which applies to Louisiana, has been stagnant for too long. July 24 marked the seven-year anniversary of the last time the federal minimum wage was raised. Since it was last increased in 2009, the minimum wage of $7.25 an hour has lost about 11 percent of its buying power.
That means the money minimum wage workers in Louisiana — and 21 other states around the country — make covers only 89 percent of what it did in 2009. An annual minimum wage income of $15,000 was a shoestring budget seven years ago. Today it’s flat out poverty, pushing hardworking people to depend on public assistance for basic necessities.
Miring full-time workers in poverty makes no sense from a business perspective. Paying fair wages boosts consumer demand and spending, which drives job creation and forges stronger businesses and communities. Gradually increasing the federal minimum wage will create an economic ripple effect benefitting businesses large and small.
Low-income workers most need to spend additional dollars, and they usually spend those dollars in the same neighborhood where they live and work. When workers have increased buying power, businesses sell more and the economy flourishes. Businesses prosper in a strong economy.
What’s more, paying employees a living wage allows you to not only attract good employees, but also to keep them. There are significant costs associated with employee turnover. The transactional costs connected to hiring and training can take a bite out of the bottom line. But the time and money spent hiring and training new people is only one of the pitfalls associated with turnover. A revolving door of employees means you don’t have the added benefit of longtime employees with institutional knowledge who keep a business running smoothly and deliver good customer service.
When employees earn a living wage they’re more productive. A poverty wage often means people are stressed by constant financial worry or have to work more than one job to make ends meet. I need my employees at the top of their game. If they’re worried about how to make rent or are exhausted from working a second job, their productivity is lower, which is reflected in my business’s bottom line. When you compensate employees fairly, they are more productive and they and their families are healthier and happier.
Many businesses, especially smaller businesses, already pay above the minimum wage in order to attract and retain good employees. And contrary to what you may hear, most of the business community is not opposed to an increase — quite the contrary. A survey of 1,000 business executives across the country, conducted for state chambers of commerce by the firm of leading Republican pollster Frank Luntz, found that 80 percent of respondents said they supported raising their state’s minimum wage, while only 8 percent opposed it.
Businesses across the country have signed Business for a Fair Minimum Wage’s national sign-on letter calling for an increase to the federal wage floor—from national corporations to small businesses such as mine, Perez APC.
It’s clear to me that lawmakers in our state and nation aren’t listening to what business owners really want—policies that will give the economy a much-needed boost. A growing number of cities and states have increased their minimum wages over the past several years, and one study after another has contradicted opponents’ hue and cry that raising the wage will hurt business. Businesses prosper when there is more money circulating widely in the economy. Period.
When Franklin Roosevelt called on Congress to enact a federal minimum wage during the Great Depression 78 years ago, he said increasing the purchasing power of workers is “an essential part of economic recovery.” Enacting a federal wage floor was intended to alleviate the poverty so many workers were suffering and stimulate consumer spending so that businesses could survive and grow. Roosevelt believed increasing the purchasing power of workers “who have the least of it today, the purchasing power of the Nation as a whole — can be still further increased, (and) other happy results will flow from such an increase.”
Agreed.
Quick Facts
• The current minimum wage is $7.25.
• It was last raised in 2009.
• A recent survey of 1,000 business executives around the country found 80 percent support raising their state’s minimum wage.
• Both O’Byrne and Margo Walsh (Maine’s 2016 Small Business Person of the Year) have signed Business for a Fair Minimum Wage’s sign-on letter (businessforafairminimumwage.org) which calls for wages to be gradually increased to at least $12 an hour by 2020.
• The wage increase would affect more than 35 million workers.
Angela O’Byrne is the president of Perez, APC, an architecture, engineering and construction firm based in New Orleans. She is Louisiana’s 2016 Small Business Person of the Year and first runner up for National Small Business Person of the Year.
Copyright 2016 Angela O'Byrne