NFIB Member, State Director in Indiana Featured About Challenges of $15 Minimum Wage

Date: August 31, 2021

Recently, NFIB State Director Barbara Quandt and member Ty Spatta, owner of Axis Painting in Bloomington, were featured in an article by the Indy Star about the challenges of competing with big box stores like Target and CVS, which recently announced they would increase their pay to $15 per hour. This is another burden of the backs of small business owners, who are already having a hard time finding qualified workers. You can read the article below:

 

Before the pandemic, a kitchen worker had to work five to six years to get up to $15 an hour at the Greenwood fast casual chain Johnny Carino’s. 

Now, workers won’t take a job short of that, said Abe Alka, a manager at the restaurant. He said the restaurant increased wages for its kitchen staff after it lost employees to higher paying chains like Dave & Buster’s and Texas Roadhouse, but it’s still hard to find workers. 

“We’re going to have to get used to paying more in labor dollars just to stay afloat,” he said.

A worker shortage that had been looming before the pandemic became a full blown problem after the countrywide business shutdown. While many progressives have been unsuccessfully calling upon the federal and state government to enact a $15 per hour minimum wage, many business owners are finding that’s actually becoming the floor in today’s market. 

Indiana workers aren’t applying for low-wage jobs. So the governor cut unemployment.

The historic pandemic, ensuing quarantine and enhanced unemployment benefits compelled low-wage workers to rethink their careers, prompting many to change jobs, retire or take care of their children who are learning remotely.

Economists say higher wages may mean that customers will pay higher prices at certain places, mostly at small and independent business in competitive industries. Large companies, they say, might have more given in their budgets to increase wages at the expense of profits. However, workers say that even at $15 an hour, some are having trouble paying rent and bills or need a second job. 

The pandemic, which brought health care and child care to the forefront of our daily lives, brought the shortcomings of the low-wage industries into sharp focus: shifting hours, rude customers, low pay,

long hours, no health benefits, no child care assistance, no sick day or paid days off. Things got worse in the pandemic as the threat of infection loomed. 

“Lots of workers realized low-wage jobs don’t pay,” said Michael Hicks, an economist at Ball State University. 

Workers also pivoted to working remote jobs such as at call centers that allowed them to care for their children who have been learning from home, he said. 

In that environment, CVS became the latest chain to adopt the $15 an hour minimum wage, which it advertised along with its 500 open jobs in Indianapolis. Other service industry chains like Target, Best Buy, and Starbucks also have announced they would adopt $15 per hour as the company minimum wage.

To compete with these larger chains, Ty Spatta, the owner of a small painting company in Bloomington, started a new employee at $15 an hour. In the past year, he’s also give raises to his other employees. 

“I’m paying $16, $17 just trying to compete with the drive-through at McDonalds, which would be a much easier job than what we do,” said Spatta. His crew of about eight workers are outside sweating in the summer heat, sometimes on tall ladders, he said. 

He said he will likely have to increase his price by 10% to 20% to offset the higher wages. 

How $15 came to be

From headlines to ads to social media posts to poster boards stuck to doors of small businesses, a $15 per hour wage is becoming ubiquitous in wanted ads.

Born out of a progressive labor movement, which became known as the Fight for $15 in the last decade, the movement gained major visibility in 2016 during the presidential candidacy of Vermont Senator Bernie Sanders. 

Despite a handful of cities and states passing laws requiring a $15 minimum wage, the federal minimum wage and that of Indiana remains at $7.25.

But the number 15 stuck in some quarters. 

In 2018, Amazon, which had battled multiple controversies surrounding its poor working conditions, made headlines announcing it would pay hundreds of thousands of its workers at least that much per hour. 

The move was largely to retain and grow its workforce. 

As the middle class jobs thin out, low-wage jobs became increasingly unappealing, said the economist Hicks. Automation not only took over for skilled workers, but also managers. Worker productivity and attendance were tracked by machines that doled out discipline and employees were treated like they’re replaceable, Hicks said. 

“Low wage workers are treated as badly in the labor market as they ever have been treated,” he said.

This change was a long time coming with wages stagnant for low-paying jobs for more than a decade, said Liz Malatestinic, a professor of human resources management at Indiana University.

Advertisements for products have in some cases been replaced by advertisements for job openings. Many of these companies are publicizing their wages with press releases, advertisement and signs at stores that spell out pay and benefits. 

“If you can make a splash, that’s free advertising for you,” she said. 

Blaming unemployment

Pay isn’t everything.

Even at $15 per hour, many places are struggling to hire.

Spatta said he’s had trouble hiring workers for the past eight years, way before the pandemic. 

“I’ll get 100 resumes and I get two that may be serious,” he said. 

Like other business leaders and conservative politicians, Spatta blames unemployment and social programs. Expanded federal unemployment expanded eligibility to self-employed people, extended the length of time people can be on unemployment and boosted payments by $300 in the latest round. However, the federal program is set to expire in Indiana on Sept. 4. 

“People don’t want to work,” he said. 

Republican leaders and many business leaders blamed the federal unemployment program, which paid more people more money and for longer periods of time, for the worker shortage. 

So much so in fact that half of the states, particularly those with Republican leadership turned away federal unemployment funding. 

In Indiana, Gov. Eric Holcomb tried to end federal pandemic funding in June but was forced by a court to continue to pay after worker advocates sued. An appellate court sided with Holcomb Tuesday, but too late for the state to end the program before its already scheduled Sept. 4 expiration. 

Economists said there’s a myriad of reasons people are not going back to low-wage jobs and the pandemic and unemployment allowed people time to rethink their lives, priorities and work. 

 

This worker shortage has hit small businesses hard, especially because not all of them can compete for workers with bigger chains, said Barbara Quandt, the Indiana State Director of the National Federation of Independent Business. 

In a recent national survey of small business owners, about half say they can’t hire enough people. 

“That’s the No. 1 problem,” she said. 

At many places, pay had been stagnant for awhile, so the adjustment to the new competitive wage may be tough. 

Smaller businesses that had been paying $9 or $10 an hour now have to drastically raise their wages to compete with bigger business that are advertising their $15 an hour, said Malatestinic. 

“It would be such a drastic increase because it’s been left on the backburner for so long,” she said.

Workers want more than raises

The exodus of people from the restaurant industry is a wake-up call for employers, said Alka.

As pay raises, so has the cost of living. And then there are benefits that many workers desperately need. 

He’d like to see more places offer paid time off for vacation and sick days and even help their employees pay for child care. 

“The pandemic exposed the flaws in the system,” he said. Before becoming a manager, he worked as a waiter and in the kitchen. 

The kitchen job was grueling work for low pay and the server job was unreliable, with busy and dead weeks and months. In the past year, he saw people leave for jobs with more stable jobs. 

The restaurant industry is filled with ups and downs. Lexi Hickman, a server, said sometimes due to tipping she’d leave a shift with more than $100 and other times less than $30.

“You never know what you’re going to make every day so that is kind of scary, especially if you have a lot of bills.”

With a shortage of servers, she’s had to pick up other jobs that other people usually did, like restocking items.  That’s a stressful way to live, but she sticks around because she

feels close to her coworkers. 

The kitchen staff has seen raises as well, but with the cost of living going up, it’s hard to get ahead. Some of them have two full-time jobs to pay the bills, even at the higher wage. 

The choice for many businesses, he sees, is high turnover and limited hours or higher pay for workers. 

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