With slim profit margins, retail food industry warns of unintended consequences for youths.
As the backbone of Minnesota’s prosperity, the food industry provides one out of every 20 jobs in the state. These companies employ more than 125,000 union and nonunion Minnesotans, and workers ages 16 to 24 hold nearly one-third of retail food industry jobs.
The industry typically operates on profit margins of around 1 percent, or one penny of profit for every dollar of sales. The formula required to maintain a viable business dictates a delicate balance between customer service, cost of goods and expense management.
In St. Paul, lawmakers are calling for an unprecedented minimum-wage increase, and they propose linking it to an annual inflationary index, creating automatic raises. While this may seem like a positive step, as an industry we have grave concerns about the unintended consequences.
Everyone remembers their first job, their first boss and the pride of that first paycheck. But trends show that youth employment is in serious jeopardy. Based on state statistics, individuals between the ages of 16 and 19 have the highest unemployment rate, at nearly 15 percent.
This age group is regulated by child labor laws that dictate the hours and tasks that 14- to 18-year-olds can work and perform. Yet despite these limitations, legislators are proposing that businesses pay these young workers the same elevated minimum wage, with automatic raises. This will inevitably have a negative impact on the prospects for youth employment.
The Minnesota food industry works diligently to promote good civic stewardship and prides itself in offering wonderful careers with good benefits. Our greatest fear is that the unintended consequences of a nearly 40 percent increase in the minimum wage will negatively impact job growth, reduce services and cause higher food prices.
We encourage legislators to take a thoughtful approach, do diligent research and engage the affected industries when assessing a minimum-wage increase this legislative session. A prudent decision is needed for a viable Minnesota.
Jamie L. Pfuhl is president of the Minnesota Grocers Association.
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