You’ll Need to Buy More Egg Sandwiches if $15/Hr Passes

April 12, 2019

By David Flemming

Many $15 minimum wage advocates like to argue that such a law would put more money in consumers’ pockets, therefore benefiting small businesses. However, Charles Martin, representing the 1500-member Vermont Chamber of Commerce, gave testimony challenging that assumption, at least as to how it will affect small, rural businesses.

Martin used his own experience at his family’s general store to illustrate the impact that a higher minimum wage would have on rural Vermont. He didn’t buy the argument that “people will start spending more because they will be earning more.” He noted that most of his parents’ customers came in once a morning to get a coffee and an egg sandwich. Even if those customers do end up with more money in their pockets after a wage boost, “people aren’t going to start buying 5 coffees and 5 egg sandwiches on their way to work.”

Stores like his will not benefit from increased spending, certainly not enough to make up for higher labor costs, but big box stores might. Stores like Walmart, Target, etc. have the national scale to absorb a wage increase (in fact, many of these stores already pay $15 an hour), and due to their large inventories of products and the nature of their customers, would stand to benefit most from increased spending by low income workers.

Charles Martin, also testified to the unfairness of “a proposal to raise the State’s wage scale by 40 percent over the next few years, when most Vermont businesses will not see equivalent revenue increases to offset such cost pressures.” Nowhere in this legislation are the incomes of small business owners considered. If they are forced to pay their employees more, but revenues do not grow to match that increase, the business owners’ incomes will decrease. And, in most cases, these are not wealthy people.

According to Wallet Hub, Vermont is already the fourth most difficult state to start a business. Raising a small business’ expenses would make small business ownership even more difficult, and would increase the 20% chance that a Vermont startup would fail in the first year due to unforeseen expenses.

Martin said that “natural economic growth” should be the solution to wage increases, not government fiat. While this might not seem palatable to some politicians, “in the case of a small business in a rural town, those wages aren’t enough to have a joyful, carefree life. But if that general store folds, those wages will be nonexistent.”

Our legislators are counting on you to buy a bigger breakfast to support this small business expense hike. Will you do your part?

David Flemming is a policy analyst at the Ethan Allen Institute

{ 5 comments… read them below or add one }

petemo April 12, 2019 at 10:15 pm

I won’t be tipping. At all.

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R. Fotion April 12, 2019 at 10:24 pm

ANOTHER NAIL IN THE COFFIN OF SMALL BUSINESS IN VERMONT. I WILL spend even MORE of my $$$ across the border in New Hampshire to stretch what I on Social Security have to spend.

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Carol D. April 13, 2019 at 12:58 pm

If the $15/hr minimum wage goes through, then the people who are making $15/hour now will want more as they will feel that their job is worth more than minimum wage. Then the unions will step in and want more per hour until the price of EVERYTHING goes up and then the $15/hr minimum wage is right back to where it was, value wise, before the wage hike. Domino effect,……….works every time.

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Thaddeus Cline April 15, 2019 at 6:44 pm

And that’s exactly why the 15 dollar rate is so good and why it should go in even faster .
As JFK said all boats rise when the tide comes in. And why Obama said the real growth comes from the middle class . As dose 90 % of all economists . Even republican ones with real PHDs in the subject not the two that Trump wants in.
You lose your employees if they can’t afford to stay . And it costs to get new ones . You don’t want to pay a fair wage then pay there rent .
Foreign countries Do so well because they pay well have such good benefits and tax high . That’s why Denmark is rated the best place to do business in Europe. Will you people please look it up ? Thank -you ahead of time before you do .
You then see longer life spans for everyone business owners and employees lower infant mortality, longer vacations , better education and better job satisfaction. Don’t take my word or anyone else’s on the internet. Please please with sugar on top ,look this stuff up and then if I’m wrong I will apologize .
In short ya want someone to show up in time and be happy to work in your place look at the places it works . That’s what PHDs in Social Psychology do . What you can’t be as interested in these things as they are . You are unable to understand what they teach to first year college students . You can’t look up comparative economics ?
I’m not selling you short , I bet you could if you wanted to .

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DEBORAH WRIGHT April 15, 2019 at 8:08 pm

Small businesses just like my own cannot afford to raise their rates every year to accommodate the annual forced rise in minimum wage. Many will be effectively put out of business, or moving to a kinder business-friendly state. In addition, all of my current well- established employees will require an equal raise. All experienced employees would understandably find greener pastures. With Earned Sick Leave and upcoming Paid Family Leave, what are small business owners supposed to live on?

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