Consider the risks of any increase in the minimum wage

  • Article by: YOSSEPH BUDLE
  • Updated: January 13, 2014 - 6:17 PM

Somali-American entrepreneur warns that expected legislation would hurt his employees.

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Imagine the outrage if large numbers of people suddenly lost their jobs. Of course, there would be criticism. What if it were the government’s fault?

Leading into this year’s session of the Minnesota Legislature, it seems likely there will be a discussion of the merits and (one would hope) the possible unintended consequences of increasing the state’s minimum wage, perhaps making it the highest in the United States, and setting it on autopilot going forward by linking it to inflation.

I wanted to tell you my story, and the story of many like me, to make sure our vantage point is part of the conversation.

I am what is being termed a “new American.” I am Somali-American. I arrived in the United States in 1998 and came to Minnesota in 1999 with $80 and some dreams. America is the land of the free and the home of the brave. There are opportunities for anyone who wants to create them. But I struggled at first, to be sure.

I have always been entrepreneurial and a risk-taker, so I believed this was the place I could do anything I put my mind to. I’ve started and shut down or sold several businesses since I first arrived. These included a driving school that I determined to be too risky, a travel agency that I turned over to a family member and a couple of insurance agencies.

Today, I run a home-health-care service with about 130 employees. My team takes care of homebound people with serious injuries and diseases. It has been a wonderful experience, and we have a great team. I pay my employees more than minimum wage; in fact, I don’t pay anyone less than $11 an hour.

Even though this is true, the dramatic hike being discussed — up to $9.50 or higher — will have a devastating effect on my business and employees. Any minimum-wage increase, but especially a dramatic increase as is proposed, eventually would push up wages above the minimum as well. Perhaps this upward pressure is the goal, but unlike big corporate interests, small businesses like mine can’t absorb even minor pressures to increase the cost of our service, which these proposals would ultimately create.

To make matters worse, there is discussion of attaching future increases in the minimum wage to some artificial indicator like inflation, which will hurt me personally. Worse, a minimum wage on autopilot would have a devastating effect on many of my employees, the very people this misguided policy purports to help.

My business has two divisions. A certain percentage of my employees are registered nurses and social workers. I provide what I believe to be a very good working environment and good wages for them. The upward pressure I would feel from a minimum-wage hike would create challenges with these employees, but we would adjust. We would struggle to make it work.

But the remaining, lesser-skilled employees such as personal care assistants or home health aides are another matter. My company doesn’t make as much profit on this part of the business. I would seriously have to consider eliminating this part of my business altogether, and I know some of my competitors are in the same spot.

Simply stated, if the Legislature increases the minimum wage to $9.50 and attaches it to inflation, it is likely to put most of the lower-skilled people in my company and other similar companies out of work. There simply isn’t enough profit to even keep this part of a business like mine operating.

An artificially high wage doesn’t just affect people who are often in a first or early job, seeking training with which they can create a great future. The impact of such an artificially high wage would hit our clients hard.

I believe the home-health-care profession provides a tremendously compassionate service, one that helps sick or injured people stay in their homes. If policymakers place costs on autopilot, they will have to answer to those in our communities we are no longer able to serve. Likely, some of these same legislators will suddenly feel obligated to “keep helping,” by creating programs to make up for services they have legislated out of existence.

Many in the Somali-American and other new American communities came here for opportunity as I did. As policymakers place increased pressures on these small-business entrepreneurs, I ask them to consider the consequences. I can’t even call them “unintended,” because the Legislature knows full well what will happen if it creates an environment where businesses can only fail.

Please be wary of how good-sounding legislation affects our neighbors, customers and clients. Please be wary of how this affects me — and my employees.

A good job is an important opportunity, but only if it exists.

 

Yosseph Budle is president of HealthMax Home Health Care Services.

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