Peaches
06-08-2003, 09:33 AM
Living wage laws killing business
Commentary: Local ordinances force jobs out
By Ed Tinsley
Last Update: 4:34 AM ET June 7, 2003
EDITOR'S NOTE: Ed Tinsley is President, CEO of K-BOB'S Steakhouses, a family restaurant chain headquartered in New Mexico, with 26 locations in New Mexico, Texas, Colorado and Oklahoma.
SANTA FE, N.M. (CBS.MW) -- Even in the midst of an economic boom, how many small business owners can afford a 65% raise for their entire entry-level staff or manage an extra $184,912 in payroll costs when they hire a 25th employee?
Now consider the economic downturn with which most of America is being challenged, and ask yourself the same question.
If the first answer was "none," the second should be "absolutely none."
While the debate in our nation's capital rages regarding the most effective way to increase economic activity, one thing remains certain: increasing employment and economic growth is a top priority.
In other parts of the country, however, this message has not been heard. Santa Fe, New Mexico has become the latest victim of the "living wage" virus that is crippling businesses and stagnating local economies across the country.
Passing these destructive local ordinances will invalidate any relief provided by our nations' leaders, leaving their citizens mired in unemployment.
In what has become the national "model" for wage activists, Santa Fe is imposing an $8.50 per hour "living wage" on all businesses with 25 or more employees -- the highest nationwide, and the only one of its kind to impact so extensively private industry. This is the work of union-funded labor activists who have been pushing the living wage concept on dozens of U.S. cities.
Their success is rampant: nearly 100 U.S. cities have passed living wage laws since 1996 and their pace is accelerating; however, most, if not all of these, specifically apply to companies that do business with local government.
While Santa Fe is just the latest to be seduced by activists' pseudo-economics, they are unique in challenging any business of size to see if they can jack up prices high enough to cover huge labor cost hikes.
State and local legislatures are working hard to help growing businesses stay afloat during this economic slump. Santa Fe's newly enacted ordinance, which will push minimum wage rates to an astounding $10.50 in 2007, is sure to shrink their economy as businesses flee to more reasonable and friendly communities.
Our system of family restaurants employs approximately 1,000 people across four states: Texas, Oklahoma, Colorado and New Mexico.
While I love New Mexico and want to build more units right here at home, I remain very concerned as just how far this will spread from Santa Fe.
My concerns are not alone.
Changed plans
Robert Powell has 200 workers at his employee staffing business. With his labor costs potentially 65 percent higher than his smaller, exempt competitors, it is becoming clear that these new rules will force him out of business or out of Santa Fe. Mr. Powell expects to move his company and take those jobs with him.
Tom Allin operates an Asian restaurant in Santa Fe and anticipates a "compression effect" when the new wage rates take effect. Currently, his assistant managers are paid $9.00 per hour for their experience -- 75 percent more than new busboys who receive a $5.15 per hour training wage. When the busboys make $8.50 per hour, the assistant managers will insist on keeping their 75 percent differential. Mr. Allin is realizing that he will be forced to give them an equivalent raise to $14.85, ruining the restaurant's chances to compete with "exempt competitors," who have fewer than 25 employees.
Nambe Mills, known worldwide for its high quality silver products, provides Santa Fe with hundreds of good paying jobs and has paid millions in taxes for over 50 years. We cannot afford to alienate these valuable components of our economic base. We are just about to do so.
Plunkett Research had long planned to open a Santa Fe office -- until they saw the living wage ordinance pass. Citing a "poor business environment," they found that arbitrary wage minimums would make it difficult to attract the investors and business partners they had hoped to bring with them.
Local realtors have seen plans to move to Santa Fe postponed or cancelled: a national grocery store and several major restaurant chains are reconsidering moves to Santa Fe.
Criminal charges
To add insult to injury, labor activists made sure that the Santa Fe living wage ordinance criminalized violations. A 24-employee firm will be committing a crime if it hires a one-hour-per-day temp for a month without boosting everyone's pay in accordance with this ordinance.
Unbelievably, the owner could be punished with a maximum fine of $360,000 and up to 180 years in prison.
Wiser communities are now taking advantage of the City Council of Santa Fe's folly. Albuquerque and Lincoln County in southern New Mexico, for example, are advocating ordinances to prevent their communities from adopting living wage laws while urging affected Santa Fe businesses to relocate to these areas instead of fleeing New Mexico altogether. Many of the businesses of Santa Fe will be faced with only two options: stay in and suffer the economic famine or move on in search of greener pastures.
Fleeing businesses, lost jobs, and jail time for noncompliance: This is not how I would prescribe a formula for economic recovery. Nonetheless, living wage activists, emboldened by their win in Santa Fe, are trying to push this model on the rest of the nation. Those to follow cannot afford this kind of economic development.
Commentary: Local ordinances force jobs out
By Ed Tinsley
Last Update: 4:34 AM ET June 7, 2003
EDITOR'S NOTE: Ed Tinsley is President, CEO of K-BOB'S Steakhouses, a family restaurant chain headquartered in New Mexico, with 26 locations in New Mexico, Texas, Colorado and Oklahoma.
SANTA FE, N.M. (CBS.MW) -- Even in the midst of an economic boom, how many small business owners can afford a 65% raise for their entire entry-level staff or manage an extra $184,912 in payroll costs when they hire a 25th employee?
Now consider the economic downturn with which most of America is being challenged, and ask yourself the same question.
If the first answer was "none," the second should be "absolutely none."
While the debate in our nation's capital rages regarding the most effective way to increase economic activity, one thing remains certain: increasing employment and economic growth is a top priority.
In other parts of the country, however, this message has not been heard. Santa Fe, New Mexico has become the latest victim of the "living wage" virus that is crippling businesses and stagnating local economies across the country.
Passing these destructive local ordinances will invalidate any relief provided by our nations' leaders, leaving their citizens mired in unemployment.
In what has become the national "model" for wage activists, Santa Fe is imposing an $8.50 per hour "living wage" on all businesses with 25 or more employees -- the highest nationwide, and the only one of its kind to impact so extensively private industry. This is the work of union-funded labor activists who have been pushing the living wage concept on dozens of U.S. cities.
Their success is rampant: nearly 100 U.S. cities have passed living wage laws since 1996 and their pace is accelerating; however, most, if not all of these, specifically apply to companies that do business with local government.
While Santa Fe is just the latest to be seduced by activists' pseudo-economics, they are unique in challenging any business of size to see if they can jack up prices high enough to cover huge labor cost hikes.
State and local legislatures are working hard to help growing businesses stay afloat during this economic slump. Santa Fe's newly enacted ordinance, which will push minimum wage rates to an astounding $10.50 in 2007, is sure to shrink their economy as businesses flee to more reasonable and friendly communities.
Our system of family restaurants employs approximately 1,000 people across four states: Texas, Oklahoma, Colorado and New Mexico.
While I love New Mexico and want to build more units right here at home, I remain very concerned as just how far this will spread from Santa Fe.
My concerns are not alone.
Changed plans
Robert Powell has 200 workers at his employee staffing business. With his labor costs potentially 65 percent higher than his smaller, exempt competitors, it is becoming clear that these new rules will force him out of business or out of Santa Fe. Mr. Powell expects to move his company and take those jobs with him.
Tom Allin operates an Asian restaurant in Santa Fe and anticipates a "compression effect" when the new wage rates take effect. Currently, his assistant managers are paid $9.00 per hour for their experience -- 75 percent more than new busboys who receive a $5.15 per hour training wage. When the busboys make $8.50 per hour, the assistant managers will insist on keeping their 75 percent differential. Mr. Allin is realizing that he will be forced to give them an equivalent raise to $14.85, ruining the restaurant's chances to compete with "exempt competitors," who have fewer than 25 employees.
Nambe Mills, known worldwide for its high quality silver products, provides Santa Fe with hundreds of good paying jobs and has paid millions in taxes for over 50 years. We cannot afford to alienate these valuable components of our economic base. We are just about to do so.
Plunkett Research had long planned to open a Santa Fe office -- until they saw the living wage ordinance pass. Citing a "poor business environment," they found that arbitrary wage minimums would make it difficult to attract the investors and business partners they had hoped to bring with them.
Local realtors have seen plans to move to Santa Fe postponed or cancelled: a national grocery store and several major restaurant chains are reconsidering moves to Santa Fe.
Criminal charges
To add insult to injury, labor activists made sure that the Santa Fe living wage ordinance criminalized violations. A 24-employee firm will be committing a crime if it hires a one-hour-per-day temp for a month without boosting everyone's pay in accordance with this ordinance.
Unbelievably, the owner could be punished with a maximum fine of $360,000 and up to 180 years in prison.
Wiser communities are now taking advantage of the City Council of Santa Fe's folly. Albuquerque and Lincoln County in southern New Mexico, for example, are advocating ordinances to prevent their communities from adopting living wage laws while urging affected Santa Fe businesses to relocate to these areas instead of fleeing New Mexico altogether. Many of the businesses of Santa Fe will be faced with only two options: stay in and suffer the economic famine or move on in search of greener pastures.
Fleeing businesses, lost jobs, and jail time for noncompliance: This is not how I would prescribe a formula for economic recovery. Nonetheless, living wage activists, emboldened by their win in Santa Fe, are trying to push this model on the rest of the nation. Those to follow cannot afford this kind of economic development.