Raising Minimum Wage Affects Small Businesses

The logo of Migration Brewing, a local company. Many small businesses have been disproportionately affected by minimum wage increases. Photo by Perry Overby.

There is a huge push by workers for an increase in the minimum wage across America. For large businesses like McDonalds, an increase in minimum wage is not a major change. But for small business owners, wages can have a major impact on the profit of the business. As employment becomes more expensive, it can become necessary for small businesses to make cuts to staff or increase prices in order to stay afloat.

Small businesses such as Migration Brewing in Portland are affected extensively by changes in minimum wage. “[The recent wage increases] really raised all of our costs—the costs of goods sold went up, which therefore means we have to increase our prices,” says co-owner Eric Banzer-Lausberg. In fact, costs have gone up not only internally, but also from suppliers; delivery fees and costs of ingredients have all gone up due to the increase. “That’s definitely how it has affected us directly,” says Banzer-Lausberg. For Migration Brewing, making sure that hours are being used effectively has been an issue. “Now we pay more for labor and labor is a huge expense for any small business, so we manage that the best we can,” explains Banzer-Lausberg. The balance between trying to maintain hours for the skilled workers that deserve the time and not paying out more than the business can afford can be a difficult one for a small business.

When minimum wage goes up, the employees that were previously earning a higher salary have to receive a pay increase in order to keep their wages proportional to what they were earning before. “We have to keep it tiered, so someone who is in a skilled position is payed above an entry level job to reward them for their experience,” says Banzer-Lausberg. This is another added cost but is necessary to maintain the skilled labor that brings value to a business. As minimum wage continues to increase over the years, those employees will continue to need pay raises, and that can be damaging to a company. However, says Banzer-Lausberg, “Change is inevitable with the way our city is growing and developing, and I’m open to change.”

For a city like Portland with so many small businesses, wage increase leads to a much more expensive lifestyle for the citizens, and even large corporations are forced to raise the prices in their establishments. However, Portland is very supportive of small businesses relative to other large cities, and therefore wage increase most likely won’t be as detrimental here as it could be in other cities. “Maybe in another city we wouldn’t have the same support and maybe I would have to work for someone else instead of being my own boss, and I never take that for granted,” says Banzer-Lausberg. Minimum wage increase is inevitable and can potentially be beneficial for employees, but Banzer-Lausberg contends, “I don’t think it’s really going to put people ahead, so to speak.”

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