We Can’t Raise the Minimum Wage Because Failing Businesses Might Fail, or Something

First of all, if Christopher wants to interview people who are truly struggling to scrape by on their meager income, he might want to start by interviewing his own staff. Second, I’m not sure I get the whole point of featuring failing businesses as the poster children of the anti-$15/hour side of the debate? I  mean, what’s the argument? If we raise the minimum wage, the unprofitable bookstores and coffee shops Christopher loves will fail even sooner? That’s hardly a sound premise on which to base economic policy.

Don’t get me wrong, I have great empathy for small business owners. I come from a family of small retailers, and I owned and operated a small business myself. My then-wife and I founded Eccentric Software in 1993, initially to publish what I loving describe as “the world’s most widely pirated rhyming dictionary software,” capitalizing our business on credit cards and some small loans from family members. Over the next five years we sold tens of thousands of copies of four different titles in shrink-wrapped retail packaging through major outlets like Computer City, CompUSA, Egghead, and in all the major mail-order software catalogs. Our software (much of which I developed myself) garnered great reviews and developed a loyal following, generating hundreds of thousands of dollars in revenue. To this day I’m proud to say that I am one of the few Americans who can boast a trade surplus with Japan.

A Zillion Kajillion Rhymes

The original retail packaging for A Zillion Kajillion Rhymes.

But while the business never lost money, it never really made much money either. It was an awful industry, one in which the people who create the most value reap the least rewards, and in which longtime vendors would sometimes just decide to refuse to pay you, simply because they could. We lived comfortably, but we eventually walked away with a six figure debt.

Still, nobody shed tears for us, because such are the risks of entrepreneurialism. We knew that going in. But we took that risk anyway, partly because of the prospect of reward, and partly because we just passionately believed in our product. I can point you to dozens of Broadway musicals and Disney movies and hit songs that I know were written using our software. That’s gratifying in itself. And the money thing worked itself out too, with my then wife’s entrepreneurial experience helping her land a dot.com job that ultimately paid off our remaining debt. (I also landed good-paying dot.com work, but my options never paid off.)

So yeah, I know what it’s like to run a struggling small business. I know what it’s like to pour all my passion and time and financial resources into a business, for little monetary return. Hell, even HA was an entrepreneurial endeavor into which I sunk immense human capital, often for non-monetary return. So I feel for small business owners, and do agree that the system, alas, is stacked against them.

That said, most businesses fail. They just do. I’m sorry that Rafael Sanchez might have to go back to an unsatisfying job at Microsoft or some other bland corporation now that his lovely little business didn’t work out (I’ve been to Cintli, and it truly was a lovely little place). I feel your pain, Rafael. Been there, done that.

But life isn’t fair. So while no doubt a $15 minimum wage might push some struggling small businesses over the edge, others will take their place. Broadway won’t become an empty landscape of boarded up storefronts, bereft of coffee shops, restaurants, and retailers. The business community will adapt to Seattle’s living wage economy. That’s the way capitalism works. And there’s no rule that says the forces of creative destruction may only be unleashed by the private sector.

Comments

  1. 2

    Very Severe Conservative spews:

    Bypass getting rid of the minimum wage level, go back to indentured servitude. Now that was good conservative values.

  2. 3

    Andrew Smith spews:

    What about Seattle Deli or Pho So 1? should those guys get jobs at microsoft if their small-scale, labour-intensive vietnamese business fail?

    That’s our answer to them? Get a job at microsoft or STFU?

  3. 4

    Lack Thereof spews:

    A business that requires poverty-wage employees in order to stay open is not a business with a solid business plan. It’s also not a business that contributes significantly to the local economy.

    They can either adapt to a city without underpriced labor, or they can go out of business (which they probably would have anyway, just later).

    Honestly, this is Seattle. We have a very high average income here. The clientele of most businesses here can tolerate the price hikes necessary to accommodate a 15/hr wage. And if they can’t, it’s not a business that was going to succeed anyway.

  4. 5

    Better spews:

    @3 I get that it’s hard for the small businesses, but if your business model requires you don’t pay a living wage to be viable, should you be in business? Where do you draw the line?
    If a business says they can only pay $2 an hour, and must hire illegals, or they will go out of business, is that acceptable?
    Here’s an extreme analogy. “You can’t repeal slavery, I need it stay in business. Why do you hate capitalism!”

  5. 6

    spews:

    @3 Or, you know, they could raise the price of their banh mi from $3 to $3.50 in order to pay the people making them a living wage. I’d pay $3.50 for a good banh mi.

  6. 7

    ArtFart spews:

    @4 “A business that requires poverty-wage employees in order to stay open is not a business with a solid business plan. It’s also not a business that contributes significantly to the local economy.”

    In fact, (and this excepts perhaps places like Dick’s) it places a greater burden on the local economy due to the social services low-paid employees need to survive. If a major segment of your business is groceries and you’re sending new hires out to apply for food stamps, something’s seriously wrong.

  7. 8

    Kiznit spews:

    I was stunned reading Frizzelle’s post. Just mouth hanging open stunned. Can he really think this anecdote proves what he thinks it proves? Has everybody over there lost their minds?

  8. 9

    Nick CapitolHill spews:

    Why should Seattle make it hard to be an entrepreneur? I don’t understand the logic.

    Yah, Capitol hill won’t be boarded up wasteland but it also won’t be supportive of startups or entry- level work either.

    Seattle is also not just Capitol Hill. It will affect Lake City or White Center business whom operate at much smaller margins. Those neighborhoods MAY just be boarded up.

    Bad logic.

  9. 11

    tensor spews:

    Interesting that Sanchez, the business owner, recognized the real reason his business struggles:

    “You have these new developments, they’re really pretty, but the rents are outrageous.

    I’ve lived near Broadway for almost twenty years, and back in the late 1990s, we were concerned about the then-proposed, since-built, new residential/storefront buildings. Their proposed retail spaces were sized for big-money tenants, not small start-up businesses. We predicted this would result in a strip of bland, corporate chain stores. Now that this has happened, our only salvation must be, “screw the workers to pay the rents.”

    Especially when our diagnosis is 100% glibtardian bullshit:

    Historically it has been proven, any time the government tries to intrude with price ceilings, price floors, they end up just fucking it all up.

    Washington state has had the nation’s highest “price floor” on labor for the last fifteen years, yet our income is above the national average, and our unemployment rate is below the national average. But why cite data if all it does is contradict your claims, eh?

  10. 12

    Lack Thereof spews:

    @9: Why should Seattle make it hard to be a laborer? I don’t understand the logic.

    Why should someone in Lake City or Delridge (White Center is outside city limits, FYI) have to go on food stamps to make ends meet, when they’re working a full time job?

    I’m all for entrepreneurship, but risk is a huge part of it. Not every startup survives. Not every business plan is viable. And we should not continue to pad the profit margins of retailers, large or small, at the expense of our city’s impoverished labor force.

  11. 14

    Better spews:

    Tensor, you are right about Broadway shops. The development sucked the soul out of Broadway.
    And “screw the workers to pay the rents.” is a terrible business plan.

  12. 15

    headless lucy spews:

    I hope everyone remembers this rhetoric the next time the banks fail.

    Some businesses are just not meant to survive.

  13. 16

    tensor spews:

    I love the snotty, condescending lecture delivered at the end — “if you don’t like your barista working for low wages, move to Bellevue!” is about the silliest non sequitur I’ve read in awhile — which posits the false choice of a zero-sum game. We can have both livable wages and successful start-ups, if we enact better land-use regulations. Requiring a mix of store sizes would get us incubative spaces next to the big-pantsed chain retailers, effectively using the latter to subsidize the former.

    You might think a coffee-loving writer who resides in Seattle — birthplace of the almighty Starbuck’s, ferchrissakes! — might get this, but no luck.

  14. 17

    Better spews:

    As none of bankersters that crashed the economy didn’t go to jail, they could at least have their banks go out of business next time.

  15. 18

    Sarah90 spews:

    Sanchez has an econ degree and an MBA, and yet he thought it would be a good idea to leave Microsoft in 2008 to open a coffee shop. At this point, unless you want to read all the comments on Slog, no more need be said.

  16. 19

    Roger Rabbit spews:

    “To this day I’m proud to say that I am one of the few Americans who can boast a trade surplus with Japan.”

    Make that two of us, because even though I’m only a loudmouthed rabbit, I own a small business that sells to Japan. No, not whale meat. I side with the whales, not the whalers, but I’ll take their money. Hell, I’ll take anyone’s money; I’m not fussy about where lucre comes from.

  17. 20

    ivan spews:

    One commenter on Slog nailed this guy’s problem. He opened shop on Broadway instead of in a lower-rent location, where he might have survived, or even thrived. And now the fatuous little twats at the Stranger, who are to journalism what Justin Bieber is to music, would have us believe that minimum-wage workers should pay the price for this guy’s bad business decision.

  18. 21

    spews:

    @17

    We can have both livable wages and successful start-ups, if we enact better land-use regulations. Requiring a mix of store sizes would get us incubative spaces next to the big-pantsed chain retailers, effectively using the latter to subsidize the former.

    Nailed it. $15/hour is good. Start-up low-capital small business incubation needs to be in the mix too, including and use regs that support innovation, and low-interest loans.

  19. 22

    tensor spews:

    Also, there are places with nothing but chain stores. Such places are called shopping malls.There are also streets with nothing but small businesses scraping by. Such streets are called slums. I don’t see a need for either where I live. A mix of sizes works best, and we can have it, with everyone working in every one of this businesses making at least $15/hour.