Lew Prince: American dream needs fair minimum wage
My life is a tribute to the American Dream. My business partner and I started with 300 record albums and a $20 booth at the local farmers market. That was nearly 34 years ago. Vintage Vinyl has grown into a multi-million dollar company with 23 employees. We stage 150 in-store concerts a year and are the largest independent music store in the Midwest.
We built our business on wages above the minimum. This has given us long-term employees devoted to our company – employees whose ongoing relationships with customers have been vital to our success.
Good wages have been good business strategy in an industry that has seen more than its share of creative destruction. The last 20 years have been tough on the music business. We’ve outlasted a 20-store local chain and numerous national and regional chains. Most of those companies paid their employees minimum wage or barely above. My creative, dedicated and better-paid employees won this life or death struggle for us.
While my competition dealt with the costly results of constant employee turnover, constant training costs and the unsatisfied customers that turnover breeds, my employees added great value to my business.
Unfortunately, many American companies have been driving down wages to poverty levels that are too low for workers to live on and too low to sustain the consumer demand that businesses need to survive and thrive. In a race to the bottom, the winner ends up at the bottom.
The American Dream needs a minimum wage increase. The current federal minimum wage of $7.25 an hour, just $15,080 for full-time work, is too low a floor under our workforce, our customers and our economy.
When we started our company in 1979, the minimum wage was $2.90 – that would be $9.33 in today’s dollars. Even back then, it had eroded from the 1968 minimum wage level, which would be $10.74 adjusted for inflation.
We never would have believed that 34 years later, the buying power of minimum wage workers – and millions of workers above minimum wage – would actually be lower than when we started our company. That’s terrible for our country.
There’s a proposal in Congress to gradually raise the minimum wage to $10.10 over three years and then adjust it annually for inflation. Like other members of Business for a Fair Minimum Wage, I believe it’s a reasonable proposal that moves us closer to where we would have been if the minimum wage had kept up with the cost of living since the 1960s.
Small business owners know that higher minimum wages put spendable dollars into the hands of our customers. Minimum wage earners, living paycheck to paycheck, spend increases right away. Adjusting the minimum wage for inflation in future years would mean the buying power of our customers and our local tax base would not be undermined by an eroded wage floor.
Companies that pay poverty wages count on other businesses and taxpayers to subsidize them. You may think of food stamps and housing assistance as helping the poor and they do, and it’s essential we maintain them. But when wages are so low that full-time workers need the public safety net to put food on the table or keep a roof overhead, we are actually subsidizing the unrealistically low wages paid mostly by big highly profitable corporations. This perverts capitalism and is lousy public policy.
For example, in Missouri, according to the Healthnet Employer Report, in the first quarter of 2012, Walmart cost taxpayers more than $6 million in Medicaid costs and McDonalds more than $4 million.
The evidence that trickle-down economics doesn’t work is all around us. People are falling out of the middle class instead of rising into it. Raising the minimum wage is a really efficient way to circulate money in the economy from the bottom up where it can have the most impact in alleviating hardship and boosting demand at businesses.
The American Dream isn’t functioning when the pie gets bigger, but the share for working people shrinks. Decent minimum wages let workers make ends meet while giving them a taste of the rewards of work.
Let’s keep the American Dream in sight for those farthest from experiencing its sweetest fruits.
Lew Prince is Co-Owner and CEO of Vintage Vinyl in St. Louis, MO, and a member of Business for a Fair Minimum Wage.