Bill Glynn, author of "The United States of Bankruptcy" joins Mike Siegel on the Boss Business Hour and is interviewed on the topic: What would increasing the minimum wage do to small businesses in the US?

It is not always as straightforward as you think...

Transcript:

Siegel: Alright folks. Welcome in, good to have you with us. Back we are here at the BOSS Business Hour and it is conversation about a subject that has been on the table for about a year. It is the minimum wage. Now there are those who would like to cut the minimum wage, now 7.25$ an hour nationally, and of course each state has its own standard as well, but the bottom line is that there is now a movement, according to the National Employment Law Project, which talks about the fact that there is a movement toward increasing the minimum wage to at least 10$ an hour. Now, apparently from a poll of 3000 people, two-thirds of the American people want to see that happen. The real question for us on the BOSS Business Hour is what will that do to impact or affect small business. With us to talk about that is Bill Glynn. We have talked to him in the past about his book, "The United States of Bankruptcy," and glad to have him on the program to talk about this. Mr. Glynn, I appreciate your time. How are you today?

Glynn: Doing well. Thank you for having me on.

Siegel: Well, it is a pleasure. Let's talk about this issue from the small business point of view, but before we do that, is there any movement in congress to try and increase the minimum wage to at least 10$ an hour at the moment?

Glynn: Well, right now it is slated to go up a little bit more than $8, I believe, but you have to look at it in respect to workman's compensation and benefits, too. With an increase, let's say, to $8.57, I think that is the number, you are really looking at somewhere between $12.00 and $14.00 per hour, because these are considered full time workers, so you have to have worker's compensation, you have to have medical benefits, you have got Healthcaid already on the hook that is going to increase that for them, or they will cut their benefits. So, you start eating into and up to $10 or more, you know, small businesses are going to sit there… and these are not mid size companies, these are, you know, mom and pops, as I would call them. They are going to try to probably bring their family in to help them run the business. They may not be hiring at that wage rate. For them, the margins are already thin. Even McDonald's and others are trying to squeeze every penny out of their businesses because they are, you know, hounded by Wall Street. So, on one side I see the small business and I see how they can be hurt. Going to $10 makes it $14 to $16 an hour. On the other hand, you have to look at the people themselves that are trying to work. Are then compensated in such a respect that they can actually afford to live. So, that is the question really. I mean, do you want to stimulate the economy bottom up by paying them more and therefore they spend more, but frankly that is not going to work because they don't pay taxes anyway.

Siegel: The other part of this is there is a fundamental philosophical question. After all, a small business is based on an entrepreneurship of an individual. It may be a family, it may be a group of people that decide, let's do X, Y or Z. They get into the business, they make the investment of time and money, they take the risk, and they are trying to struggle to survive. Now, if you start to artificially create wages instead of letting the free and open market place decide what those wages will be, aren't you impeding the free market process, and aren't you impeding the ability of that small business to grow and maybe hire more people, because your point a moment ago was that at $10.00 an hour, you start bringing family members in and those jobs in effect are going to go away because the family won't make a salary, they will have a piece of the business. So, the people that are working for them, they won't have a job anyway.

Glynn: Correct. And I think also people are in revolt saying, you have got to pay us more. Look at the unions that had and are crippling our economy and skewing the political landscape in the favor of democrats. I mean, you look at all the set wages, collective bargaining in the United States of America, and you will continue to see impact on employment and small business and you will see midsize companies and larger companies in groves putting their operations overseas. We are right now almost the second highest tax rate country in the world in corporate. I mean, look at me, we have tons and small businesses, lots of emerging companies. We typically, of course, hire engineers and what not and pay far over minimum wage, but we look at, and I look at personally, at someone stepping in taxing me on gas, taxing me where I live, taxing me on my state, taxing me on my car, taxing over 40% of my income. You are all in. Drive around, buy a candy bar, buy anything, and you are racking up sales tax and every other tax imaginable. They are really taking 70% of our money. That is what they are doing.

Siegel: …paid until May or June for all taxes at all levels that you just described and you now have got until August and September. So, you are right. It gets really ominous. But back to this point about small business and the impact of a 10$ plus minimum wage. I would like to pursue that, because people listening right now are small business listeners and this program is designed to advocate for small business. Look, the big corporations aren't going to be affected by this. As you said, it is the mom and pop operation. If you start now suppressing those businesses and they can't afford to do what they were going to do because of this regulation, what is that going to do to the response of the economy, because at that level, as you pointed out, those people don't pay taxes anyway, so how is the economy going to benefit from increasing the minimum wage to that degree?

Glynn: Well, the first thing that will happen is those minimum wage employees that work full time will get their benefits booted. Right, so then they go on the government side and, you know, essentially get paid more and get benefits from the government. You know, that is what they are going to do. If I were a small business and someone was jacking up the amount of money, forcing it down my throat, that I have got to pay people, I am going to get rid of my benefits. Why am I going to go and, you know, afford all these benefits to the employees when in fact they are gouging me for more money. Period. That is one of the first things that are going to happen.

Siegel: What about the new health plan that by 2014, at least at the moment, depending on the constitutional question and the lawsuits, but if it goes into affect, aren't small businesses over 50 employees going to have to get involved in that, and then if they don't get involved won't they have to pay a fine to the government for that coverage to take place anyway?

Glynn: Yeah. I will write a check and pay the fine just despite the fact that they are shoving stuff done my throat. My fine is infinitely less than the program I have to employ. That is just economics.

Siegel: Well Massachusetts has the model for this plan and they have had a lot of businesses, small businesses, do the same thing. Just pay the fine, because they cannot afford to pay for the health care.

Glynn: Right, and health care is getting jacked up substantially, which will continue, and you know they say 42,000,000 uninsured Americans…. Where are they going to get insured? Are small businesses and midsize businesses going to continue with their insurance? No. They are going to boot them out and then they are going to go to the government, which then costs more money, which then trickles down and economic contraction, and what does that do? It affects small businesses. If people have to go out of pocket to pay for their own insurance, guess what, they are not going to spend as much money. So, that affects small business. I am not just talking about Healthcaid, you know, it is a variety of other things that affect small business and will affect small business. People don't dissect the magnitude order of taxes coming down the pipe. They are all focused on the extension of tax credits that already exist. Don't call them Bush. It is a decline in taxes and they are going to raise it on all of us? Forget it. I am appalled.

Siegel: What about the poll from the National Employment Law Project which says two-thirds of the American people want at least a $10 minimum wage? What about that movement, and therefore the political impact of that?

Glynn: Well, who did they poll? I didn't get a phone call.

Siegel: They polled 3000 people and, as you know, arguably we all say we didn't get a phone call, but if it is statistically done properly it is a pretty good reflection of society, unless the poll is not credible? Polls are pretty accurate these days.

Glynn: At times. You know, I don't really believe in polls. The universe isn't hand selected. They go out and a lot of times it is random. You don't know who you are talking to. I certainly understand the cost of living gin the United States and the ability of full time workers to make money enough that they can actually afford to live. I know that is problematic. However, if I had workers and I was paying them $5 an hour and they were performing well, I would be shoving money in their pocket all day long. Why? Because it takes me thousands of dollars to train them, and it really does, to bring them up to speed to make sure they can do the job that I ask them to do, and if their performance…. I mean look at it, small businesses are generous, the majority of them are. If I have good employees, I am going to pay them a lot more. I am going to pay them more than minimum wage. Why? Because they are producing for me and I am making more money. So, here you have these people that walk into…. Go to McDonald's, go to Burger King, go to any fast food restaurant, and all these other places that have minimum wage workers. Are you getting good customer service? I am lucky to walk out of there without pulling my hair out. You know, it is what it is. I mean, you have got people that know they are going to paid a certain wage, so what incentive to they have to over perform because it is what it is. They know what they are going to get. For me, I would base, and I want to base, on performance. You perform, you get paid even more than you expected. Otherwise, don't shove money down, with taxes and new wages, my throat. That is what is happening. We are socializing our society and it is up to us, the small business owners, to fund it all. It is horrifying. Horrifying.

Siegel: Well, it is going to be an interesting process to see whether this gets any traction in congress, but it is out there and now there is momentum from some groups to increase the minimum wage at a federal level, Of course, each state can do it own its own as well. Well, it is always good to talk to you. I appreciate your time. The book is called, "The United States of Bankruptcy." If people in the small business area are interested in getting involved in this issue, the would well be advised to do so with respect to the minimum wage proposals, and keep your eye on congress. I am sure the small business associations across the country will be involved as well. Thanks for being with us. Good to have you on the program.

Glynn: Yes Sir. Thank you again.

Siegel: Have a good day. This is Mike Siegel. Good to have you with us at the BOSS Business Hour. Until we come back and do it again, remember always, do be good to yourself and the world and the world will be good to you.