Minimum wage issue 'hits hotel owners right in the balance sheet.'
AMERICA’S YOUNG JOB SEEKERS better dust off their lemonade stands, because part-time summer jobs are no longer easy to come by in many states.
Wonder why? While it’s true that the economy is still recovering from the Great Recession, part of the blame lies with voters and politicians in some states who approved increases in the minimum wage. New Jersey is an unfortunate example.
Like most people, I’m not opposed to higher wages. When employees perform and a business profits, I’m all for it. As an owner of 12 College Hunks Hauling Junk and Moving franchises in New Jersey, I’m fortunate that I’m able to employ young adults at a wage rate that’s above the state minimum. But not all businesses are like mine – and the issue hits hotel owners right in the balance sheet.
For instance, at the diners, ice cream stores and arcades for which New Jersey is well known, earning a few cents in profit for each dollar in sales is the norm. When the minimum wage goes up, these employers are left in a difficult situation: Either raise prices on customers, or figure out a different way to absorb the higher cost. That means fewer hours for current employees — or fewer employees, period.
If you’ve been to a grocery store recently, you probably understand this dynamic: Instead of a young adult bagging your groceries for you, you bag them yourself. Even self-serve soda refills at fast food restaurants were originally introduced as a means to reduce the number of employees needed to serve a customer.
The evidence suggests that New Jersey’s Jan. 1 minimum wage increase is creating these unintended consequences for those least able to absorb them. A survey of affected businesses released by the Employment Policies Institute found that nearly 30 percent were very likely to reduce staffing levels, and 27 percent were very likely to cut employees’ hours. In a state like ours where the unemployment rate for young adults was averaging nearly 25 percent at the start of the year, these results are not promising.
Doesn’t it bother you seeing so many youth waiting on the sidelines for a job? According to monthly jobs reports from the US Department of Labor, unemployment is not getting better. In fact, today it is shocking how few young people reach adulthood and join the active workforce.
I know something about the value of entry-level work. I currently employ 36 people in New Jersey, and 22 of those employees work part-time. I’ve come to know many of them personally: They’re often students, and they’re looking for work that fits in with the rest of their busy schedule. The job provides them with additional income, but it also provides a set of “life skills” that they can’t pick up in a classroom or a textbook.
A person’s first job adds to their educational base. That includes interacting with customers, business knowledge, American history, human respect, showing up on time, preparing financial reports and even reaching your God-given potential — all tasks that make young people more competitive and attractive in the job market.
If young people don’t get these skills now, their later lives will be more difficult. I had the opportunity to start my first business at 22, but not everyone starts out ready to be a business owner. Without the formative workplace experience that comes from a first job, then New Jersey’s next generation of entrepreneurs might never find their vision and their voice.
New Jersey’s experience should be an example for Congress, which is currently considering an even steeper increase in the minimum wage to $10.10. Everyone has to start somewhere — and for the sake of the next generation of our workforce, I hope Congress doesn’t chop the bottom rung off of the career ladder with an ill-conceived minimum wage hike.
Stephen Bienko is the chief executive officer of 42 Holdings, which includes College Hunks Hauling Junk franchises. He is a member of the Job Creators Network, which provided this opinion piece.