American Forum Op-Ed

AMERICAN FORUM

By John Shepley

As a small business owner, I support legislation to increase Maryland’s inadequate minimum wage because it makes good business sense. It’s an important part of our economic recovery and economic progress. I know businesses can pay a better minimum wage and still make a profit -- it helps the business prosper.

Opponents of this legislation like the Maryland Chamber of Commerce, the Maryland Retailers Association, and the Restaurant Association tell you the time is not right to increase the minimum wage because the economy is weak. What they don’t want you to remember is that for them the time is never right. In 2005, they opposed legislation to raise Maryland’s minimum wage from $5.15 an hour to $6.15. They opposed federal legislation to raise the minimum wage in 1996, in the middle of the longest economic expansion in our nation’s history. Then president of the Maryland Retailers Association, Tom Saquella, cut to the chase when he said about their opposition in 1996, “A lot of it’s philosophical.”

So let me cut to the chase: If my business, a small nursery in rural Harford County, can profit and grow when paying a wage that people can thrive on, then there’s no reason any viable business cannot do that too. Unless, that is, their philosophy is getting in the way of good business sense.

Claims that a higher minimum wage will cost Maryland jobs and hurt our local economy are rubbish. The real hard evidence, such as a comprehensive study published in the November 2010 Review of Economics and Statistics, shows minimum wage increases do not increase unemployment.

I challenge anyone who thinks the minimum wage shouldn’t be raised, to try living on it. The minimum wage is now just $7.25 an hour, or $15,080 for full-time, year-round work. Today’s minimum wage has far less buying power than it had in the 1960s.

How is it good business to pay a wage so low your employees are continually stressed because they can’t make ends meet and are looking to leave at the first opportunity? Businesses that pay lower wages almost always have higher turnover. Instead of paying adequate wages, the owners are paying to recruit and train new workers who aren’t as productive as a more stable workforce.

The cost of a higher minimum wage is more than offset by increased productivity and cost savings from reduced turnover. At Emory Knoll Farms, we know we can count on employees: They look after the quality of our products, they understand and anticipate our customers’ needs, and I can count on our people to step up when our business needs demand a little extra. Our employees know we’ll stick by them when times are tough, and they will stick by us.

How is it good business to pay a minimum wage with less buying power than it had in the 1960s? Doesn’t that weaken the consumer demand at the heart of our local economy? I know people at the lower end of earnings tend to spend 100% of their after-tax income. They put it right back into local businesses buying food, clothing, car repairs, and other necessities of living. That money spent locally adds more jobs and boosts our economy. Moreover, a higher minimum wage boosts the sales tax and personal income tax base.

How is it good for Maryland taxpayers to have a minimum wage so low it increases the strain on our social safety net? Many state governments have reported on the public health care burden from underpaid employees of big national retailers – Massachusetts, for example, found that in 2009, Wal-Mart had more than 5,000 employees receiving health insurance coverage through state public assistance programs. The state’s cost for these Wal-Mart employees and dependents is conservatively measured at $16.6 million.
The Chesapeake Sustainable Business Alliance, made up of local and independent businesses, has signed the Business for a Fair Minimum Wage statement in support of raising Maryland’s minimum wage to $8.25 this July, $9 in 2012 and $9.75 in 2013 – and adjusting it beginning in 2014 so it does not fall behind the rising cost of living. Local and sustainable business owners know our fortunes are entwined with the fortunes of our employees and customers.

The right thing to do for Maryland workers and families is to move the minimum wage to a level where people can do more than “just survive.” Raising the minimum wage will move us towards a more stable and sustainable Maryland economy.
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Shepley is co-owner of Emory Knoll Farms Inc., a wholesale nursery in Harford County. He is also chairman of the Chesapeake Sustainable Business Alliance, made up of local, independent and sustainable businesses in Maryland.
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Copyright (C) 2011 by the American Forum. 3/11

AMERICAN FORUM

By Rick Poore

A good friend and fellow businessman once told me, “Give me more customers and I’ll be forced to buy equipment and hire people to meet demand. Give me a tax break without more customers and I’ll just go to Aruba.”

Ending the Bush tax cuts for the wealthiest taxpayers is the right thing to do for small businesses. I’ll say that again: it’s the right move for small business. Let me explain.
I consider myself an example of an average small business owner in Nebraska. I have 30 employees. My business does $2 million plus in annual sales. My personal income as the owner is less than $85,000 a year.

It’s a comfortable living, but ending the Bush-era cuts on the top two brackets won’t come close to impacting me. And it won’t impact the other small business owners I know, either. The top brackets won’t kick in until your taxable income is over $200,000/year for individuals and $250,000/year for couples, and they’ll only apply to the portion of your income above those amounts, not below them. Less than 3 percent of taxpayers reporting any business income (not limited to small business income) earn enough to break into the top two brackets.

But that’s not all. That 3 percent figure includes Wall Street hedge fund managers and K Street lobbyists whose income is reported as business income on their personal tax returns. Not exactly what you’d think of as small businesses, or our nation’s job creators.

Last time I checked, Wall Street types and their K Street friends had driven the economy into a ditch the size of the Grand Canyon and killed over 8 million jobs. Do they really deserve another tax giveaway to reward their efforts?

The idea that ending the Bush cuts for the top brackets will hamper small businesses’ ability to reinvest is a complete red herring. Any true small business that ends up with more than $250,000 net profit flowing through to the owner at the end of the year needs to hire a better accountant and rethink its business plan.

Let’s use me as an example. I gross a lot in sales, sure, but I’m busy reinvesting that money back into my business – buying equipment, promoting my business and hiring more workers. The dollars I reinvest don’t pass through onto my personal tax return so I don’t care if that rate changes a little bit, and neither do the millions of other true small business owners in this country.

Despite all this, some politicians continue to recycle the tired old myth that a small change in the top brackets will hurt business owners’ ability to reinvest in our businesses. There are two possible explanations for this.

First, these politicians have never been close enough to a small business to learn how our taxes actually work. We’ll call that an accidental sin of ignorance. A simple cure is to get out and meet some small business owners in their home states and hear about our day-to-day operations.

Second, some politicians are playing fast and loose with the facts. They know better, but they just don’t care. That’s intellectual dishonesty – a different kind of sin. Not much I can do to help there.

The bottom line is small businesses don’t need another tax giveaway. What we need are policies that restore our customer base by getting people back to work in our communities and putting money in their pockets to spend in our businesses.

Ending the high-end tax cuts would free up close to $40 billion in 2011 and $700 billion over the next 10 years to invest in job creation and rebuild our customer base. That’s what small businesses really need.
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Poore is owner of Design Wear, Inc., a custom screenprinting business with 30 employees in Lincoln, Nebraska. He serves on the steering committee of the Nebraska Main Street Alliance.
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Copyright (C) 2010 by American Forum. 10/10

LOUISIANA FORUM

By Camille Moran

SOUTH CAROLINA FORUM