How A $15 Minimum Wage Would Have Damaged Small Businesses


Getty Images/iStockphoto

Close-up view of unrecognizable young woman gripping American One Dollar Bill. Horizontal composition. Image taken with Nikon D800 and developed from Raw format.

In the last few months, Democrats have planned to include a $15 per hour minimum wage in their $1.9 trillion coronavirus relief package. President Biden signed the relief bill recently, but the minimum wage increase was not included because it did not comply with the rules governing budget reconciliation (the process that enables Democrats to pass the rescue package without GOP votes).

If this minimum wage increase were enacted, it would have damaged small businesses in our current economy. Proponents of the increase argue it will help the families who have struggled to earn sufficient money during the quarantine. The New York Times says that the increase “would help families raise money and rebuild their plans for the future… Life savings lost can be replenished and families can become financially stable faster…”.

However, The New York Times only hits the tip of the iceberg, since many issues arise with this drastic change for small local businesses. With the current status of small businesses, many see no possible financial future if this change is enacted.

The minimum wage is a never-ending issue because of inflation. The major problem with raising the minimum wage is COVID-19, and the shift toward online shopping has caused local retail businesses to suffer financially. So, the bill will theoretically help families get back on their feet from their difficult situations, but many retail stores simply are not making enough money because they are seeing fewer customers in their stores.

Also, the move toward Artificial Intelligence and touch-free forms of payment has increased exponentially due to this continued crisis and the abundance of online shopping.

The problem for families: they have lost jobs and are consequently suffering financially. Working at retail stores that never seem to get enough customers lowers people’s monetary gain and COVID-19 has caused families to lose much of their savings in the future. The increase of the minimum wage raise will be helpful to people who have jobs that do not pay sustainably.

A solution for families: the minimum wage should only be raised for large chain corporations that see large profits in states compared to the local stores that only have one or a small number of locations in a small area. Most of the large companies can continue to profit with an increase in the minimum wage with employees becoming financially stable.

The problem for companies: the minimum wage increase would cause companies to lose money that they do not even have. My father’s company, Parkway, has been dealing with continuous hurdles. Parkway is dealing with heavy taxes, and Uber/Lyft businesses replacing parking in Philadelphia and other cities have been in constant competition for the last few years.

COVID-19 caused his company, along with many others, to lay off employees. This raise in minimum wage could potentially lead to the loss of more money and jobs.

The shift towards online retail and the Covid crisis has also caused a spike in online shopping. This is part of the reason why small businesses are not making money compared to large companies. Why walk into Whole Foods when you can pay for someone to bring it to your house? Why have people standing at ten different cash registers when one person can supervise twenty self-checkout stations?

My father has gotten into the touch-free experience himself by adding new technology to his garages and lots. This allows him to avoid paying for a person to look over and collect payments, each parking lot uses technology that doesn’t take cash allowing for efficient transactions that save the company tons of money.

A solid example of the worker-free experience is AmazonGo. Amazon’s product of the future, AmazonGo, mixes advanced AI technology with efficient engineering to make a sustainable human-free experience in supermarkets. With no clerks and no shelves in the store at all hours of the day, the store can become financially efficient, saving the customer time.

With no theft and no human contact, this change will make Supermarkets safer from burglary. A major issue for these supermarkets is that the rise of the use of technology leads to fewer job opportunities.

Another important idea to consider is that all states and areas are different. Urban areas are more accustomed to large crowds of people coming into the store every day, while rural areas see fewer people. Generally, a lesser profit is earned in these rural areas, thus their employees earn less.. This hurts rural communities and families.

The solution for small businesses is to change large companies’ minimum wage. Companies like Amazon have been making even more money than usual due to COVID-19. These large organizations should have more money to spend and can afford the potential increase of minimum wage, while smaller businesses are not making enough money to maintain this change in wage.

When local businesses become stable, the employees should see a small rise in the minimum wage. They will not see a drastic rise since this possible change is too burdensome to maintain financial stability. The minimum wage should increase a small amount every year according to inflation. The government should wait a few years and give local businesses time to rebuild themselves after the devastation of COVID-19.