Glen’s Garden Market had a minimum-wage predicament.
In July, the District’s hourly minimum wage increased to $11.50 — the same amount the upscale market was already paying its entry-level workers at two locations. The purveyor of high-end groceries and prepared foods no longer had an edge against other retailers in attracting high-quality, entry-level employees.
So owner Danielle Vogel boosted hourly wages by another dollar, to $12.50. With that action, Glen’s launched a real-time experiment on the impact of higher minimum wages on a small business as well as a test of how much consumers are willing to pay to guarantee a “living wage” for cashiers, baristas and others who wait on them.
“Our number one customer value is that we go out of our way to exceed expectations,” Vogel said. “A scenario that we were competing against McDonald’s and all other large-scale places was not drawing the level of talent that we required.”
The debate over the minimum wage has played out in the nation’s capital in recent years as city leaders determined how high to push the wage.
In 2014, the District passed legislation to incrementally raise the minimum wage from $8.25 to its current $11.50. In June, D.C. lawmakers voted to increase the minimum to $15 by 2020 — a win for the national “Fight for $15” campaign. The federal minimum wage is $7.25 per hour.
Supporters say an increase in the minimum wage is necessary to help bridge the nation’s growing income gap, but critics say it will force businesses to lay off employees to keep up with rising costs.
Glen’s customers are voting with their wallets: Some deli sandwich prices are going up a dollar, for the first time in four years, and there are price increases for other items.
Glen’s has been public about its decision to increase wages and raise prices in support of a livable wage in an expensive city. The business, which opened four years ago and has 96 employees, posted a letter in its two stores about the decision.
“As you all know well, it gets more expensive to live in the city every year. Given that you know about our culture and our values, it probably comes as no surprise that we want to support and nourish our team just as much as we want to support and nourish our community,” the letter reads. “To that end, we did something pretty big heading into this holiday season — and we hope you’ll support the decision.”
D.C. Chamber of Commerce leaders testified before the D.C. Council against such a large increase in the minimum wage, saying it would hurt businesses and ultimately raise the cost of living in the city. Margaret Singleton, then-interim president of the D.C. Chamber, likened an increase earlier this year to a tax passed along to customers.
“The proposed legislation, as did the last minimum-wage-increase law, will increase the cost of housing, food and consumer products,” she testified before a D.C. Council committee. “Equally likely, employers would reduce fringe benefits and restructure their workforces or reduce future hiring because, after all, a minimum-wage increase is a tax on employers that must be addressed in overhead and/or the product.”
The D.C. Chamber of Commerce also argues that the increase could mean residents of Virginia, where the minimum wage is $7.25, would apply for District jobs in greater numbers, hurting low-income D.C. employees. Maryland’s minimum wage is $8.75, although it is $10.75 in Prince George’s and Montgomery counties.
Glen’s isn’t the only small business in the District trying to stay above an increasing minimum wage. Public Option, a pub in the Northeast Brookland neighborhood, doesn’t accept tips and instead pays its employees $15 an hour. U.S. Labor Secretary Thomas Perez has praised Gina Schaefer, the owner of Ace Hardware shops in the District, for paying employees more than the minimum wage.
The D.C. government hasn’t studied the effect of the recent wage increases on small businesses. Council member Elissa Silverman (I-At Large), a proponent of the increased minimum wage, said she has received positive responses from businesses that want to provide their employees with livable wages.
“Mostly, I’ve been hearing that businesses want to do the right thing by their employees,” Silverman said. “We don’t want this to have a negative impact on local businesses. It’s a balance, but we need to have wages that allow people to live in this city and to be able to raise a family in this city.”
Vogel said the wage increase would cost her about $200,000 this year, but she added that higher wages would lead to happier and more-loyal employees. She said it’s too early to know whether a recent dip in sales is the result of higher prices or such factors as the election and the holiday season.
“We wouldn’t have done this if it were going to drive us out of business. It’s not going to drive us out of business,” Vogel said. “It’s just going to make us have a hard couple of months as we adjust.”
Glen’s took inventory of its items and determined which were bringing in the smallest profits — or yielding no profits at all — and adjusted prices accordingly. The adjustments haven’t recouped the costs of the wage increases, Vogel said.
Early indications show that customers are less willing to purchase some costlier items. Taking the biggest hit is a popular special at the prepared-foods counter that had cost about $10 per plate. Now, the cost is determined by the weight of the food, leaving customers with a bigger tab.
“I did notice that they were jacking up the prices on my pork banh mi,” said Will Park, a 23-year-old employee of a D.C. nonprofit group. “I cared, but marginally. I’m still willing to pay.”
Chelsea Hick, an employee at Glen’s Dupont Circle location, said some customers have asked about the price increases. She said that once she explains why the prices have risen, the customers are usually supportive.
Hick’s salary increased from $15 to $16, enough to offset the $50 a month jump in her health-insurance costs next year.
“It didn’t necessarily put me ahead, it just didn’t leave me falling behind,” Hick said. “That $50 would have been a gap in my income — that’s a full shift. It’s a lot of peace of mind.”
Source: Washington Post