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Small businesses see new minimum wage law as a "business killer" for them

MoCo LogoWhile local union members and activists cheered and waved their “Fight for $15” signs on Monday as Montgomery County Executive Ike Leggett signed legislation Monday to boost the minimum wage to $15 an hour, some small business owners fear that their livelihoods and those of the people they employ will be hurt by the mandated increases.

“It will force me out of business,” said Richard Gorinson, owner of J&S Shoes in Wheaton.

Gorinson said “[B]y the time it goes into effect, I’ll go out of business.”

Under the new law – which was signed by Leggett after a previous version of the bill was vetoed – Montgomery County’s minimum wage will rise slowly from its current $11.50 an hour to $15 an hour eventually. Employees with 51 or more workers will have to pay the new wage by 2021, but non-profits and smaller businesses have until 2024 to do so.

“If sales are flat, where does the money come” to pay the higher wages? Gorinson wondered, noting that with only three full-time and four part-time employees, it will be difficult to reduce hours.

“Montgomery County is just so un-business-friendly,” he complained. “It’s mind-boggling,”

Gorinson has owned the Stride Rite shoe store since 1990 and has struggled through high rents, rising health care costs and increasing Internet sales, all factors which have eaten into his profits.

He currently offers bonuses and commissions to his workers, but if he has to pay someone who has little or no experience $15 an hour, he’s not sure he can continue that.

Under the new law, “I have to pay someone with no experience $15 an hour just to clock in. If they could clock in and get $15, why would they help customers,” he wondered aloud.

This is why bigger stories are using self-checkout, he said, adding, “It means those jobs have disappeared.”

The higher wages are “coming out of my pocket,” he said, noting that it’s already not uncommon for him to take less money home for himself when sales are down.

“I don’t get it. It’s simple math,” he said. “I can’t continue to do this and make a living.”

Rather than raise the minimum wage, Gorinson would have preferred that the County help people get a better education that would lead to better-paying jobs.

Joe Richardson, CEO of Bar T, which offers afterschool programming and summer camp, is also upset with the higher minimum wage.

“This is Montgomery County once again making business difficult in Montgomery County,” said Richardson, who employees 250 people. “I will have to raise my prices.” 

Richardson was surprised the vote was unanimous, but said he understood why the Council voted the way it did.

“I think the Council members are well-intentioned. They had a lot of people saying they couldn’t make a living here. I understand the pressure there,” he said.

Richardson also speculated that the imposition of term limits may have contributed to the bill’s passage by allowing a consequence-free vote for newly term-limited Council members. But those members won’t be in charge when businesses start closing, he said.

Bill Hart, general manager of Strosnider’s Hardware, said raising prices is not a choice for him at soon-to-be four Montgomery County locations, because competition with online retailers has taken away much of his pricing flexibility.

Hart, who used to start new employees at minimum wage and let them work their way up to $15 per hour, noted that with the new law he will eventually have to pay his greenest employees what he now pays his most skilled ones.

“They will want more, understandably,” Hart said, suggesting that he may have to cut hours and employee bonuses in order to be able to pay the increased wages for all.

Hart said another effect of the increase will be that employers will screen their hires more carefully.

“It’s going to make us hire smarter and not put up with mediocre employees,” he said, noting that he wished the Council had left wages to the business owners, while allowing workers to go wherever they can make the best living.

“We should let the free market determine the rate of pay.” 

@SuzannePollak

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