Business owners, leaders expect payoff with wage increase

By Olivia Montes
Posted 7/12/21

Upon hearing that state lawmakers had passed an increase to the minimum wage June 17, Ryan Peters, co-owner of RISE Fitness+Adventure in Rehoboth Beach, was delighted.

At the same time, local business leaders are thrilled that more money is moving into the wallets of employees and hoping they spend big at area companies, bolstering bonds between shops and consumers.

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Business owners, leaders expect payoff with wage increase

Posted

Upon hearing that state lawmakers had passed an increase to the minimum wage June 17, Ryan Peters, co-owner of RISE Fitness+Adventure in Rehoboth Beach, was delighted.

At the same time, local business leaders are thrilled that more money is moving into the wallets of employees and hoping they spend big at area companies, bolstering bonds between shops and consumers.

Mr. Peters — whose gym has been paying its staff above minimum wage for nearly three years — said Senate Bill 15 needed to be approved.

“Ultimately, these people need more discretionary income, … (and they) don’t necessarily need to work three or four jobs just to make ends meet and put food on the table,” he said. “(This bill) gives people the ability to earn a living and keep that money within the community … without worrying about if they’re going to be able to make their car payment or rent.”

After hours of deliberation, SB 15 with Senate Amendment 1 officially passed, with 26 for and 15 against.

With the addition of SA 1, which will raise the current minimum wage of $9.25 per hour to $10.50 on Jan. 1, 2022, SB 15, originally introduced in March, aims to steadily increase the current minimum wage to $15 per hour by Jan. 1, 2025, thereby strengthening consumer spending, providing a boost to the statewide economy and shifting toward a more responsive workplace culture.

The additional nine House amendments, which include allowing small businesses to pay employees 85% of the minimum-wage rate and requiring an annual report noting the fiscal impact of these annual increases, were either stricken or defeated.

However, as Alissa Barron-Menza, vice president of Business for a Fair Minimum Wage, explains, those amendments, if they had passed, would have done more harm than good.

By limiting the ability of local businesses to reach a $15 pay rate for all employees, the chances of them maintaining steady customer support, sufficiently providing for their workers or even surviving are significantly low.

“Keeping the minimum wage low makes it harder for small businesses to compete with big businesses,” she said. “In order for small businesses to thrive in competition with their bigger counterparts, you need employees willing to stay long enough to learn your business, … and it’s hard to get there if your employees would rather be working and doing the same job at someplace else for more money.”

Ms. Barron-Menza added that keeping both big and small businesses on the same “universal timeline” increases morale and productivity among workers. With the exclusion of those amendments, the bill will help both large and local markets compete on a level playing field and provide for employees and customers alike.

For Ravi Goel, managing partner of Even & Odd Minds, a consulting firm in Wilmington, the passage of this bill not only helps expand his business but also aids the surrounding community.

“Most of the people who are on the lower side of the wages to $70,000 (a year) … are spending and putting the money back, … (and) this increase will be good for people, as well as the economy,” he said. “This (bill) will be a step in the right direction towards having a better quality of living in Delaware.”

Upon receiving Gov. John Carney’s signature, small businesses, in keeping up with their competitors, will see their models steadily adapt to these wage changes.

In addition to the approximately $1.25 raise with each passing year, businesses will also see their own rates of consumer spending increase, which would, in turn, help stimulate much of the U.S. economy, would boost demand for hiring and could also increase sales to combat rises in labor costs and employee turnover.

This raise, Ms. Barron-Menza explained, not only puts money in the pockets of employees to pay for basic needs but also in the hands of consumers, who will then spend that same money at local businesses, thus strengthening the business-consumer relationship.

In addition, for consumers, seeing those same employees with higher rates of productivity, morale and customer service because of that raise in minimum wage will encourage them to come back and shop again at those same small businesses, therefore helping companies compete with larger chains and be a permanent fixture in their communities, she added.

While it depends on how quickly each individual business will evolve, as some have already shifted toward a $15 minimum wage, considering factors such as how many people are currently employed and working, Ms. Barron-Menza said that there is still time to make the necessary adjustments toward a sustainable business model.

As of 2021, 30 states have a higher minimum wage than the federal amount of $7.25 per hour, and 22 of those have wages higher than $9.25 per hour. California currently has the highest wage at $13, set to reach the $15 mark by 2023. Both New Jersey and Maryland have passed similar legislation to reach this goal, whereas Washington, D.C., did so in July 2020.

While reaching a $15 minimum wage would help combat statewide poverty and level out the economic playing field, opponents of the bill fear that it will lead to mass employee layoffs, higher training expenditures and extensions of basic insurance, eventually losing more money than earning.

As Central Delaware Chamber of Commerce President Judy Diogo argued last April, with President Joe Biden now in the White House and Delaware in the spotlight, “the state is set for economic growth if it can just hold off on increasing labor costs.”

Beverly Knight of Knight’s Fine Jewelry in Camden agreed that the minimum wage is low and should be raised, but she noted that it can be difficult for small-business owners to pay employees a $15 hourly wage and that the state should not take it to that level without earning it.

Ms. Barron-Menza disagreed, insisting that opposing this regulation is a “knee-jerk reaction” and that businesses will benefit just as much as their employees will, with no indirect consequences.

And, she adds that, while this bill is a step forward, keeping up with the cost of living needs to be an ongoing piece of legislation.

By continuing to increase pay and adapting to fluctuating prices of food, shelter and rent, Delaware can actively provide businesses and employees what they need to live.

“It’s so important as a stimulus for our economy that we are addressing this gap between what it currently costs to get by and the current wage,” said Ms. Barron-Menza. “The minimum wage is not a new mandate, …and the intent for it is to be an anti-poverty wage, not a poverty wage.

“But if we don’t continue to increase the minimum wage, … then we have all those workers who are at the wage floor, working full time and still not making ends meet.”

As the bill awaits Gov. Carney’s signature, many businesses await the new wage — which will, as Kristen Deptula, owner of Canalside Inn in Rehoboth Beach, added, help guarantee that workers nationwide receive the wages they need.

“We are very excited, and we are hoping that other small businesses will be excited with us,” said Ms. Deptula, who has been paying her employees $15 per hour since October 2019.

“I hope federally that we can embrace the wage for every state, … so it’s not just a state here and state there, because I think everyone, through this and last year, can use a win like this.”

An earlier version of this  story incorrectly spelled Ms. Barron-Menza's name.