Minimum Wage – The Downside

The Minimum Wage… voters in the city have voted against it before voting for it. The latest version (the one that passed) not only includes an immediate pay raise but also annual raises that are tied to CPI. The Journal ran a good editorial today that you might want to take a look at (read it here).

Joy Junction Founder and Director Jeremy Reynalds has 48 employees and says that although the shelter is in the unincorporated county, as a charity his organization has followed the city’s higher minimum wage. That has resulted in “$62,000 that we have to come up with somewhere really that we don’t have. … So the income has to come up with us in order for us to continue operating at the level we’ve been operating for the last year.”

Unfortunately, reality isn’t cooperating.

The shelter’s income is down $134,000 as donations dropped in 2012 compared with 2011. Reynolds predicted such fallout when the city considered such a wage increase back in 2005, saying then “proponents of these laws don’t seem to understand that money has to come from somewhere. If this law was to become a reality, and I pray it never does, Joy Junction would have a number of options. They would include asking our donor base for additional funds to cope with the increased need, closing our doors, or laying off a number of staff and severely diminishing the services we offer to our needy guests.” 
– Albuquerque Journal 11/16/2012

Jeremy Reynalds is absolutely correct – “[the] money has to come from somewhere.”  And that doesn’t just apply to charities and non-profits. Small businesses are hit particularly hard by regressive policies like the minimum wage. Sometimes its hard just to keep the doors open and make payroll without having to chase the consumer price index every year. It simply doesn’t make sense to punish those who work so close to the margin by inflicting upon them additional costs that will eventually overtake what little profit they manage to eek out.