U.S. wage law may sink some stores

Publish Date: July 22, 2014

Topics: minimum wage, tenants


As localities around the U.S. raise minimum wages, many retailers are likely to raise prices to offset the resulting higher labor costs. In some cases retailers will curtail hiring, reduce employee hours or lay off workers. But many independent merchants are loath to take such steps at a time when they are struggling to regain their footing from the economic downturn and to fend off competition from chains and Internet vendors. Some are not even able to raise prices to cope with higher labor costs, because they sell goods with prices fixed by suppliers. 

On top of a hike in California’s state minimum wage, and another in the works, some San Diego officials are supporting a ballot measure that would increase the city’s minimum wage to $11.50 per hour by 2017, and require employers to provide earned sick leave.

San Diego’s Seabreeze Nautical Books & Charts is among the businesses unable to offset increased labor costs — publishers set the price of books, and the governments of the U.S. and Canada set the prices of the nautical charts the store sells. Seabreeze owner Ann Kinner, a boating enthusiast, says she may ultimately have to make do with less help in order to get by. Competition from Internet vendors offering charts at a discounted price has hardly helped matters. Until 2008 the store had four or five part-time employees at any given time, mainly college students willing to work for minimum wage in exchange for the chance to learn about the maritime world. To ease overhead Kinner now employs only one part-time worker, and she fears she may have to reduce hours even there to compensate for labor costs. This would force her to spend more time manning the store and less time on such activities as marketing. Legislators “seem to think that small businesses have an endless supply of money,” said Kinner. “I cannot magically increase my sales because they want to increase the minimum wage.” 

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