What a Minimum Wage Increase Means to Small Businesses

October 21, 2016
Some small business owners say a $15 minimum wage would be such a financial burden they might have to close their doors.

By Brenda Flanagan

“I think that’s going to hurt. It’s going to hurt really bad,” said Amit Pujara.

Pujara can’t imagine paying his gas station attendants $15 an hour. He bought an Exxon station and 7-Eleven in Farmingdale eight years ago to escape the corporate rat race, but his profit margin’s slim. Pujara pays attendants New Jersey’s current minimum wage — $8.38 an hour.

“We don’t make enough to cover our payroll to begin with. It’s very tight. And on top of that, if you pay $15 it becomes much harder and we have no choice left but to pass on all that increase to our customers. And instead of two people working, I will have one person working,” he said.

“It’s a matter of addition and subtraction,” said Sal Risalvato, executive director of the New Jersey Gasoline, C-Store, Automotive Association.

Risalvato says count the orange cones if New Jersey’s minimum wage rises.

“When it becomes unaffordable to have an employee, you will see more orange cones at gas stations blocking off pumps because they will not be able to afford to put an employee at that pump. And the result is that motorists will have to wait longer for their gas,” he said.

“I think you’d probably see like all restaurants raising their prices,” said restaurant owner Robert Pluta.

Options shrink for small family businesses like Leonardo’s Restaurant in Lawrenceville. Owner Pluta can’t cut his bare bones staff. And he says seasoned kitchen workers who already earn $15 won’t accept beginners earning the same pay.

“Now $15 becomes the new base salary, not just here but everywhere. Do you think they’ll be happy with what they’re making? No. They’re going to expect, it’s going to compress all wages up. And that’s what I’m concerned about,” he said. “I still have a mortgage to pay and taxes to pay so the money’s got to come from somewhere. Most likely it’ll be a price increase.”

One market analysis shows drastic increases in the minimum wage could drive up the price of groceries and other essentials by $249 million. Gov. Chris Christie vetoed a $15 minimum wage bill with special vehemence and warned it would return as a ballot question.

“These are not the kind of things that we want happening in our state. In addition we don’t want to continue to make our state an outlier on costs. We’ll be one of only three states that has this. That’s not a distinction that we should be looking for,” he said.

“I don’t think that’s the case at all. You have to take care of your people,” said Marilyn Sealy.

Sealy owns Wells Rug Service in Morristown — a small business that cleans fine carpets. It’s thrived since 1921.

“We wash rugs by hand so they’re rinsed and washed with a scrubber. The fringes are done by hand the following day. Very, very labor intensive. It’s all labor, here,” she said.

Wells employs 10 workers, pays them about $25 an hour, on average.

“Because these people are my most valuable asset. So they deserve a living wage. We’re living in an expensive county. They have to be able to live here, eat here. If you don’t take care of the people that are there, day after day representing your business, then there’s something wrong with that picture, in my opinion,” she said.

“You pay someone better, they’re more likely to stay. You’re also going to have employees who are more committed and harder workers, and that’s going to increase productivity and that will boost a business’ bottom line,” said New Jersey Policy Perspective Vice President Jon Whiten.

Whiten notes most higher wages get spent locally. He admits, “Every time the minimum wage is increased, prices do increase a bit but it’s never the dramatic effect that some people predict. It’s not a dollar-for-dollar kind of thing.”

For Pujara, it’s close enough.

“Small person like me, I wouldn’t be able to stay for long. I don’t see it,” he said.

Would he close the business?

“I guess I would end up taking that hard step,” he said.

Many business owners say they can’t afford to pay summer help $15 an hour either. Pujara says if the $15 minimum wage passes, you can start counting the cones.

RELATED: What Life is Like for a Low Wage Worker