Op-Ed: Minimum Wage Hike’s Effect on Main Street

In this op-ed from the January 24 edition of the Albany Times-Union, Susan Novotny, owner of the Book House of Stuyvesant Plaza and Market Block Books in Troy, New York, explains why it is crucial that the state’s small business owners have a voice in discussions to raise the minimum wage to $15 per hour. Her op-ed is republished here with permission from the Albany Times-Union.

After working to institute a wage increase for fast-food workers in 2015, Gov. Andrew Cuomo has declared that one of his top priorities in 2016 is raising the minimum wage to $15 for all workers.

In his push for a significant minimum wage increase, the governor is supporting the policy goals of a number of unions that are advocating for a $15-per-hour wage across the country.

And while I am not opposed to a well-thought-out minimum wage increase, the Fight for $15 begs the question: Who is going to support the small businesses that will be paying this significantly increased wage?

If small businesses, the engines of the state’s economy, are not included in discussions as to how this increase will be phased in, it will only hurt those the wage increase is attempting to help. If workers use their new discretionary income to buy from out-of-state online retailers, as opposed to buying locally, for instance, it will undermine this drive toward the $15-per-hour minimum wage. Are workers prepared to support the businesses that are employing them and so many others?

I am not opposed to paying my employees a good wage and health insurance coverage. As an independent bookseller, outstanding customer service is what differentiates my store from the chains. To that end, stores like mine very often pay their employees more than the minimum wage.

Independent stores are also the linchpins of a sustainable, thriving community. Since 2002, a number of studies have documented the positive economic impact of locally owned businesses, and their significantly greater economic return to the local economy than that of retail chains, big box stores, and remote online retailers. Supporting independents strengthens communities — and their workers.

Here’s another important fact to understand: The portrait of employers who hoard their money and refuse to share profits with their hard-working employees could not be further from the truth. This is not Wall Street. This is Main Street. And, when it comes to small businesses like indie bookstores, the margins are small. Very small. A successful independent store makes a profit of maybe two percent — most make less.

With margins this tight, it is important to understand that a small change can have a very big effect on profitability. If the minimum wage is raised, it inevitably means independent businesses will have to increase the wages of senior and full-time staff in addition to increasing the wages of any minimum-wage workers. A seemingly “insignificant” wage increase can have a dramatic effect on the bottom line, sending a profitable store into the red.

A carefully executed minimum wage increase is more successful if planned in conjunction with concrete steps to support independent Main Street businesses. The importance of independent retailers to the fiscal health of their communities cannot be overstated.

If the state raises the minimum wage without including New York’s small businesses, including independent bookstores, in important policy discussions, they risk harming the people they are seeking to help, by forcing independent businesses, which work on very small margins, to cut benefits or staff hours — or worse, to go out of business.

It’s a two-way street. New York cannot support a higher wage for workers without supporting the small businesses that employ them.