$15 hourly wage will be a killer for many small businesses

April 24, 2014 

Let me tell you the reasons, from a business perspective, why a $15 per hour minimum wage is a terrible idea.

I own a Dairy Queen restaurant. Anyone who knows about restaurants knows they all have debts to pay. I had to borrow $800,000 to remodel five years ago. I do almost $900,000 per year in net sales.

Out of all the 180 Pacific Northwest Dairy Queens, my location’s revenues are slightly below average. I could never pay myself more than $40,000 per year. My business made a 4.3 percent profit last year, but in October I ran out of money and had to borrow $30,000 on a line of credit.

Now the minimum wage is at $9.32 per hour. So $15 per hour is $5.68 more. If I pay my employees for 24,000 hours, I have to pay out $136,320 more per year. Add 8 percent for Labor and Industry fees and Medicare fees – another $10,900 – and the additional total becomes $147,220.

Also, since none of my managers makes $15 per hour, I will have to pay all five of them more. So add $15,000 more, at a minimum, and we are over $162,000.

We cannot raise prices enough to counteract the increase in labor cost.

You might say, “$15 per hour will increase the purchasing ability of those people.” Tell that to the senior citizens who are on fixed incomes and can no longer get into my deluxe cheeseburgers, fries, drinks and sundaes for $5. They cannot make any more money!

Most of my workers do not have a high school education. Some are trade school students. They work for me for a short time and leverage my training to secure a better job. Some of them become assistant managers or managers and then move on.

This is not a final destination. But to pay a high school dropout more than $30,000 a year is not responsible. Should we pay them as much as a diesel mechanic makes after two years of trade school?

I am 64 years young and only have my business and a building: no house, no money saved. Yet I still owe more than $800,000. I had a plan to retire at 75.

We business owners take all the chances of succeeding and failing. We are risk-takers. If this plan of $15 per hour succeeds, I couldn’t even sell my business, as I owe too much right now. I would lose everything. I would only have Social Security income and probably have to move to Mexico to survive on $20,000 per year.

I hope Seattle’s leaders become educated on how businesses work. This is just one small business I am talking about; consider all the businesses and jobs threated by these overzealous and nearsighted actions.

I am not against people living better lives, but they should earn it through hard work and diligence. A $15 hourly wage or a figure close to this will bring down many hard-working business owners who deserve a better fate than this.

Over 50 percent of all businesses are small. Where do you think your tax dollars come from? Don’t bite the hand that feeds you.

Bob Mandel, a Newcastle resident, owns a Dairy Queen franchise in the Tacoma area.

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