Friday, September 22, 2006

A Case Study in How a Minimum Wage Increase Would Affect a Small Business

Coyote Blog details how a a proposed minimum wage increase to $6.75/hour in Arizona would affect the private campgrounds he operates (emphasis added):
  1. ...Camping fees will have to rise by approximately 12.5%. This means that a camping fee of $16 will go up by $2. I will not make any more money, this will all be a pass-through to my employees, most of whom really wanted to volunteer in the first place. One could rename this ballot initiative the "vote yourself a camping fee increase" initiative. A few years ago, an attempt to raise lodging taxes on camping by a few percent met with howls of opposition. But in effect this is ballot initiative in in effect adding a 12.5% tax to camping fees.

  2. My labor model of hiring retired people may well have to change. There is a real trade-off in hiring retired folks to maintain campgrounds. On the plus side, we get a lot of honest and responsible people who have the time and the flexibility in their life to pick up stakes and go live in a campground all summer. The down side, of course, someone who is 75, or 85, is not going to work as fast or as productively as younger folks. My workers also tend to get injured more easily (my insurance company freaks every time it sees my employee list with dates of birth) which costs a lot in workes comp. premiums.

    When presented with the choice in the current market of hiring a retired person at $5.15 an hour or a younger, faster worker at $7.50 an hour, I have been happy to hire retired people. This model has worked great for us. Unfortunately, I must revisit this business model when my choice is between hiring a faster worker at $7.50 and a slower worker at $6.75 (and rising). Already in high minimum wage states like CA, OR, and WA we have begun shifting away from hiring as many retired people. I also hire a lot fewer people, having invested in automated fee collection in high labor cost areas. (Think about this, at least for a few seconds, before all of you start sending me the inevitable emails I get for being a heartless brute for paying anyone minimum wage).

By the way, the federal government gets around this problem for the campgrounds it operates itself. How? Why, it exempts itself from these laws. Most federal campgrounds employ retired persons as volunteers. They don't pay campground workers minimum wage, they pay them ZERO...


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