Steven W. Ramm: Minimum Wage is Garnered by Good Intentions, But Does the City Council Know What It’s Doing?

blogimage.jpgEconomic stimulus is great, but raising the minimum wage in Richmond may not be the way to get it there.

According to the ordinance currently under consideration by the city, the goals are to stimulate the local economy, create jobs and raise the quality of life for people.  If these proclamations by the Richmond City Council are truly the likely results of a phased-in increase of the local minimum wage over the next few years, then I am all for it.  Unfortunately, I have not been shown any evidence that a move to raise the minimum wage in Richmond alone will have such wide ranging effects.

The Richmond minimum wage ordinance, as written, contains a major design flaw - an exemption for employers with fewer than ten employees. One of the many problems with this ordinance is that the city has absolutely no idea how many businesses fit that profile. It seems pretty evident from my 15 years of doing business here that the city is largely composed of small to micro-small businesses containing less than 10 employees.  It would seem that this exemption significantly reduces the amount of people that would receive the higher wage thus significantly reducing any chance of a stimulus actually occurring.

While most employers will not actually have to raise their minimum wage, the few that don’t qualify for the exemption will have to abide and will be driven out of the market or forced to relocate.  Others will have an incentive to lay off employees in order to qualify for the exemption.  Additionally, this will create a disincentive for small businesses with less than ten employees to expand and hire more people, leading to the unintended consequence of fewer new jobs.  Thus I am concerned this ordinance as written would hurt the people it is intended to help by causing both a loss of existing jobs and a job freeze rather than the stimulus the City Council would like.  

When the federal government or state governments make drastic changes to the minimum wage laws, they commission and undertake extensive and detailed research into the projected effects of such economic moves.  The findings are then generally published and subjected to significant review and comment periods in which individual private citizens and relevant businesses are given the chance to voice their concerns or support.  These solicited views are taken into consideration before the process moves forward and a vote is made.

In Richmond, almost none of this process has taken place in preparation for enacting a minimum wage ordinance that could have negative consequences for the entire city if it is constructed improperly.  They have almost no data on the makeup of the local business community. Additionally, rather than commissioning a study on what the effect of the raise would look like in Richmond specifically, the mayor and others on the Council simply point to data from Berkeley and Oakland – two cities that are also working to raise the minimum wage, but are very different than Richmond in many ways; not to mention, those cities did commission studies before acting.

It is simply reckless to move forward with a minimum wage ordinance that would make Richmond standout amongst its regional neighbors while the city is still on such tenuous economic ground.  I know that I, as a small business owner, am concerned about what the shift may do to my company’s bottom line and I have heard that sentiment echoed by other business owners in the community at recent City Council meetings.

If I may borrow a turn of phrase from then-Senator Obama: I am not opposed to all minimum wage laws; I am opposed to dumb minimum wage laws.  Under the current circumstances, it seems we might have the latter on our hands.  All I want from the city is some more time and some more information.  I do not think that is too much to ask.

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