How Small Businesses Are Responding to Oregon's Minimum Wage Proposal

Date: February 16, 2016 Last Edit: February 18, 2016

Business owners may have to close their doors should the proposal go through.

How Small Businesses Are Responding to the Minimum Wage Bill

If having one of the highest minimum wages in the country wasn’t enough, Oregon business owners might soon face the prospect of even higher wages.

It’s expected that some sort of minimum wage increase will go through this year, and the legislature’s most recent proposal would set the minimum wage in Portland at $14.75 by 2022, with the rest of the state at either $13.50 or $12.50 depending on the county – all well above the state’s current minimum wage of $9.25.

For many business owners, including Keith Kaiser of Sandelie Golf Course and Gary Peck of Cindy’s Hallmark, this could mark the end of their businesses as they know it.

Kaiser runs a golf course that has been in his family for generations. It’s a small business with around 30 employees in the summer and a dozen in the winter, with many who are paid minimum wage. If those wages increased, Kaiser doesn’t know how he’d be able to pay them.  

“The money can only come from one place, and that’s cutting hours,” he says. “What other options are there? I can go to the bank and take out a line of credit, and of course the last option is to raise my prices. But that’s not an option because we’re in competition with government-owned golf courses.”

If Kaiser cuts the wages of his long-term employees to make up the difference in minimum wage increases, he creates a lot of hostility between coworkers and also fails to honor the skilled employees who have put in the time with the company.

“The options are pretty slim,” Kaiser says. “Basically, I can lay people off or cut wages. Those are the only options. Every single dime, every single penny, goes back into the business.”

Should wages go up, Kaiser may have no other option but to close up shop. It’s a possibility that would leave employees without work and move businesses out of the state—the potential result for many companies should the proposal go through.

“We are still reeling from the last minimum wage increase and the economic downturn. A business can only absorb so much before it’s time to close the doors,” Kaiser says.

Peck faces the same unsettling future. “In 2015, we used just under 36,000 hours of minimum wage, so it’s pretty easy to figure out the impact of what raising the minimum wage will be,” he says. “With our particular style of business, our margins are not that big. We just don’t have a way to cover those kinds of increasing costs that go up that quickly.”

 

Business owners are frustrated that minimum wage is once again on the table after an increase just a few years ago. “That was supposed to solve the problem,” Peck says. “Now we’re looking at another situation where the state wants a huge increase in minimum wage. I don’t see how we make it work.”

 

Peck’s only option, should the proposal pass, is to close down one of his stores and reduce the working hours and number of employees in others—all decisions that would negatively impact the workers themselves.

 

“It’s great to have a $15 minimum wage, but you’re not going to have any jobs,” Peck says. “People are going to lose their jobs and they’re going to lose hours. That’s the bottom line with something like this.”

 

For Kaiser and Peck, as well as other small business owners, any increase in the minimum wage is going to be a hurdle. But a proposal that is more scaled down and realistic would have less of an impact on business.

 

“Wages have to go up to meet the cost of living, but that’s the decision of the employee and employer, not the government,” Kaiser says. “I think it should just be between the employee and employer. But when you get the governor mandating something, that throws a wrench in the works.”

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