By Stacy Perman
New York Times, Feb 5, 2014
... there are also business owners who support the increases. These owners suggest that businesses actually benefit from paying higher wages because of reduced turnover and the additional money that goes into local economies.
Amanda Rothschild, co-owner of Charmington’s, a cafe in Baltimore, calls the arguments against raising the minimum “shortsighted.” Since opening in 2010, the cafe has paid new hires $8 an hour, more than the current $7.25 minimum (they also earn tips).
“I think those against increases underestimate how business success is tied to employee satisfaction,” said Ms. Rothschild, who employs 11 people full time and three part time. She said her employees were part of the reason her cafe’s revenue increased to $600,876 last year, up 31 percent from $457,940 in 2012. She expects another increase this year.
Paying higher hourly wages was part of Charmington’s business plan from the start. “We felt that we would end up with more dedicated employees, who would be happier, and we found that to be true,” Ms. Rothschild said, adding that she had a 22 percent employee turnover rate, compared with a restaurant industry average of 50 to 75 percent. A stable staff, she said, helps productivity, saves her money on training and food waste, and leads to better customer service.
With Maryland looking to raise the state’s minimum ... She says she believes that it is possible to increase wages and still keep her payroll within 35 percent of operating costs without cutting hours, jobs or benefits. “I believe part of our costs in running a business includes investing in employees,” she said.
There are examples of small businesses that have made paying higher wages a cornerstone of their operations — and then grew much larger. Costco, for example, pays its hourly employees an average of $20.89 an hour (Walmart’s hourly workers make an average of $12.81). ... Today, In-N-Out Burger pays a starting wage of $10.50 (McDonald’s pays on average $7.73 an hour by one estimate). It has close to 300 stores in five states (McDonald’s has more than 34,000 globally), and according to Technomic Inc., a research firm that centers on the food industry, it ranks second only to McDonald’s in revenue per location for fast-food chains.
Copyright 2014 New York Times