The survival of small businesses amidst wage increases
Tue Apr 19
Real talk: Should there be a $15 minimum wage? If you ask big corporations and small businesses alike, you’ll likely get resistance. For the former group, a recent Harvard study found that most big food and retail corporations in the U.S. are not paying anywhere near a $15 per hour minimum wage.
Yet, these corporations are seeing record profits as inflation rises to a 40-year high while they continue to refuse to adjust wages for non-executive employees. With data from over 20,000 employees, the report found:
- An overwhelming majority of workers make under $15 an hour at companies such as McDonald’s (90%), Wyndham Hotels (87%), Best Western Hotels (78%), and Starbucks (60%) — though McDonald’s and Starbucks have pledged to raise wages.
- Dollar General is the worst offender, paying 92% of employees less than $15/hr and over half under $10 while its CEO was paid over $58M in total for just 2021.
- But some companies are paying more fairly: Amazon, Costco, and UPS all enacted the largest hourly wage increase in a decade at 5.1% and pay at least $15/hr.
The story plays out a little differently for small businesses, who have small profit margins. And unlike corporations, 80% of small businesses say they have taken a financial hit in the past six months. Of the small businesses who had increased wages to keep employees from quitting, 60% don’t have enough margin to absorb higher labor costs, forcing them to either risk losing customers by raising prices or shutter the business altogether.
So how do we vouch for wage increases without killing smaller businesses, a much-needed part of a competitive marketplace? Some argue for federal aid that would allow small businesses to increase wages with everyone else. Analyses show the cost of this aid would ultimately be offset by the follow-on effects of wage bumps, such as increases in worker productivity, reductions in turnover, and aggregate increases in consumer spending.
Careful what you wish for, it may cost you paradise
Tue Apr 19
Hawaii isn’t the only one incentivizing Americans to set up shop locally. In fact, Puerto Rico has been trying to lure in new business and real estate investors since 2012 — but frustrated local residents have had enough. Here’s what’s been happening.
First, to help with their recurring debt issues, Puerto Rico implemented two tax incentives in 2012 to draw wealthy investors to the island.
- The first drew in businesses by providing an exemption on dividends for any company that establishes an office on the island. They didn’t even have to hire locals unless the company exceeded $3M in annual revenue.
- The second wooed individuals by offering a full exemption on local taxes if they buy property, donate $10,000 to a local nonprofit, and live on the island for at least 183 days per year (thereby establishing residency).
Then, a series of disasters exacerbated the country’s economic crisis. And this includes the pandemic, but the pandemic also drew interest from Americans working remotely looking to lower their cost of living — with a beach view at that. In October 2021 alone, the country approved over 70% of the 1,349 applications from people looking to become resident investors.
The result? Cost of living has soared and residential construction is constant (the lights from which confuse endangered turtles on the island and direct them towards predators). Native Puerto Ricans are frustrated by the many perks given to Americans while over three million locals living on the island do not qualify for local tax breaks.
Locals are also losing access to their public beaches as American finance, tech, and cryptocurrency residents take over, leading to protests against these “crypto colonizers.” And just this month, the Supreme Court ruled against providing older, disabled, and blind Puerto Ricans with the same SSI (Supplemental Security Income) mainland Americans receive, prompting more calls against this modern colonialism starting with statehood.
Below The Fold Bytes
Breaking Up With Breakfast
How many meals a day is necessary or even healthy? While individual needs should be considered first (such as managing diabetes), the evidence is rolling in that eating just one or two meals a day is more in line with how our bodies evolved. Breaking fast, or breakfasting in modern terms, a bit later after waking gives our bodies more time to digest our evening meal, properly switch out of sleep to process glucose correctly, and release energy from body stores. So for many, this could be an easy and highly beneficial habit change. In fact, breakfast as a meal is a pretty recent idea and the “wisdom” that breakfast is the most important meal of the day is actually from a marketing play by cereal companies that capitalized on 1940s maternal guilt, fear of indigestion, and even religious morality. Bacon and eggs got a similar treatment by its industry. >> Read More
The Many Costs of Tipping
Many tourists in the U.S. find the entire culture of tipping perplexing. When is it appropriate? How much is right? Why not just include it in the price if everyone is expected to pay a tip? While Americans have their own frustrations with the system, they seem to have heightened. The appearance of the tip jar at places we normally don’t tip, the guilt-inducing tip form on digital payment screens everywhere, and the realizations over the many issues of the tip system from its unpredictability to potentially unfair distribution has all made customers uncomfortable. The pandemic has its hand in this jar, too, as customers became more generous to support local businesses while prices have risen. Consumers say they can’t sustain such high costs both financially and emotionally, but what to do when tipping equates to your character? >> Read More
🎬 Action of the Week
Still believe in the federal $15 minimum wage requirement? Push Congress to mandate it by signing Fight for 15’s petition.
THIS WEEK'S SOURCES
- Vice: Harvard Study 10 days old | 5 minutes long
- CBS: Soaring inflation 4 days old | 6 minutes long
- Forbes: Small businesses suffer 1 year old | 5 minutes long
- American Progress: Economic argument 1 year old | 13 minutes long
- Gizmodo: Puerto Ricans protest 10 days old | 7 minutes long
- Latino Rebels: Americans take over island 3 months old | 12 minutes long
- New York Times: Investing in a slice of paradise 1 month old | 20 minutes long
- NBC: PR locals excluded from benefits 9 days old | 4 minutes long
ASCII-ing About the News
_.-'~~`~~'-._
.'` B E R `'.
/ I T \
/` .-'~"-. `\
; L / `- \ Y ;
; /> `. -.| ;
| /_ '-.__) |
| |- _.' \ | |
; `~~; \\ ;
; INGODWE / \\)P ;
\ TRUST '.___.-'`" /
`\ /`
'._ 1 9 9 7 _.'
jgs `'-..,,,..-'`
We have to tip at the bakery now?!
Yeah, they knead the dough.
Art Credit: Joan G. Stark