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Minimum wage increase pales to COVID impact


The economic sledgehammer of COVID has driven concerns over 2021 minimum wage increases into the ground.

The virus seems to be the largest factor impacting the economy of local Escondido businesses. 

Despite concerns of many that minimum wage increases could result in reduced work forces and rising prices, it is not of the magnitude feared. The main reason is that most local small businesses consider and treat their employees like family. There was an overall concern for the wellbeing and survivability of their employees. 

There is a laundry list to running a successful business. That includes cost of goods, rent, utilities, marketing and advertising in addition to payroll. All this is challenging in normal times. 

COVID has added an entirely new dimension. The virus now seems to be the largest factor impacting business expenses. 

Business survival depends on addressing this issue head on. The added costs of sanitation and safety, plunging profits and reduced number of employees are far more significant according to those interviewed by The Times Advocate. 

Despite full tax credit, granted to businesses to pay up to 80 hours of COVID-related sick leave, employee absence impacts a store’s ability to keep up with serving customers. It’s all money out the door. 

Normal duties like stacking shelves, cleaning or serving customers still need to get done. Some employees are reluctant to work for fear of contracting the virus. Someone has to pick up the slack. This usually falls on the owner or manager.  The minimum wage increase is just one more fly in the ointment. 

“I lost two employees.  I wanted to hire some delivery drivers. Some said no. They don’t want to risk it, “ said Lynn Ike, owner of Carousel Flowers.  “We have lost a lot of staff. People are not coming to work. I have been out doing deliveries myself.”

When asked about the wage increase, Ike went on to say, “It is hard in the very beginning to adjust to the increase. We have tried to hold where we are.  With COVID we have less staff.” Ike added,  “We are learning to be more efficient with our time.  We have cut corners to maintain.  Everyone is pinching pennies. If I can’t maintain my bottom line, I will have to raise prices but in the meantime I am adjusting and maneuvering to get by without having to do so.“ 

Another owner/manager of a laundering business who had come from a large corporation wants to keep it an employee-friendly environment. 

“The minimum wage increase is a good thing for employees. I want them to be happy, “ he said. “They are very loyal and they are happy working here.” He already pays above minimum wage and will increase salaries again soon. But it comes at a cost. 

For him the reaction to the pandemic decreased his business by 80% at the beginning. He is still down around 40%. He has had to reduce the hours of his employees from full time to three eight hour days, cut one employee and supplement those hours himself, but not because of minimum wage. 

“That pandemic hit us emotionally and mentally. It is no one’s fault,” said the laundry business owner.  “We have to muscle through it.  I have to work harder and do the front counter. I need my pressers. I need the work to be done so I do pressing too.  I installed the doorbell ringer right next to my station because the compressor is loud. When customers come in I can hear them and go serve them.” 

Personally he has had to cut back and dip into his credit cards—making only the minimum monthly payment to keep paying his employees and his doors open. “Employees need to be paid first and then rent,” he said.

To make ends meet he has had to raise prices on some of his more in-demand items by about 25 cents. He had also successfully applied for the Paycheck Protection Program (PPP) loan to help. 

There is a family atmosphere within the small business community and even in some larger national chains. The boss is not only the boss but also the head of a family concerned for its members. Most pay above minimum wage and some give small bonuses for a job well done on a frequent basis like Tom Smolan of TS Industrial Supply. 

TS Industrial Supply specializes in hard to find items, with emphasis on construction, municipal, light manufacturing and military supplies and pressure washer sales and service. 

“How do you survive on minimum wage anyway?” Smolan asked. “We pay more than that. The government gives you lots of warning to prepare. We have always been ahead of it. We have only two employees.  We do not have many perks, but when I can, I give an extra $100 as a nice cash reward.” 

His is a family business that has been serving Escondido and North County’s clients since 1980.

A small grocer specializing in Mexican foods has had to contend with rising costs not only due to the pandemic and the minimum wage increase but also due to the trade war with China. 

The cost of plastic forks, knives and disposable food containers alone has all gone up, forcing him to raise prices.  “Everywhere prices are up. It’s the law of the land,” he said. 

Glen Burford of Glennie’s Office Products sees the minimum wage as not a factor for him although he can see how it can become a wage spiral, impacting the bottom line and prices. 

According to Burford, labor is not the highest expenditure; the cost of goods is. Profit margins are smaller than they were 50 years ago. Manufacturing prices are impacting his outlay for imported goods. 

When it comes to labor costs Burford’s approach is a human and employee-centered one. Having worked in a large corporation where he believes employees are not seen as people but merely a head count, he prefers to work as a family business made up of people he cares about. 

“In a large corporation you may be asked to cut your head count by 10%. They are just bodies to them. Small businesses tend to have a feeling for their employees,” said Burford. “We are slower to the gun on putting people up against the wall. They are people to us, even if they have not been with us for a long time.  We are more reluctant generally and it is not as easy to reduce head count. They are our neighbors.”

Small businesses rely on their neighbors for their livelihood. This has become even more evident under pandemic conditions.  Their reliance on the community’s support is huge. 

“Here in Escondido people are so loyal to small businesses. I hope they continue to do that. We appreciate it. We have to survive,” said Edgar Navarro of Twinkle Tub, a laundromat on 2nd Avenue. 

Burford concurs, emphasizing how important it is to shop local. Ultimately it is about investing in and building a supportive community with a strong reliance on customer loyalty. 

When shopping local, the money spent gets circulated back into the local economy. That is financially significant to local restaurants, grocers, hairdressers, nail salons, dry cleaners, dentists, lawyers, and many other neighborhood establishments. 

Support of local charitable organizations comes from local businesses wanting to help neighbors who are in need, youth sport teams and community assistance groups. 

Burford also stressed the value of relationships with the community and businesses working together to help each other. 

He talked about how he was able to get a local paint business to create and provide him with hand sanitizer to sell to local doctors’ offices. It helped them both to generate income and at the same time provide a much-needed product. 

Most of the small community business owners echoed Burford’s sentiments.  

Depending on the business, some have suffered significant losses while others held their own and at times even thrived during the pandemic.  

Home improvement stores are the ones that seem to be thriving. 

One manager mentioned that business is up. With people confined to their homes many are filling their time making repairs and doing upgrades. 

Even though prices have increased because of the pandemic, home improvement business does not seem to be slowing down. Many of them are hiring. As with all other businesses the minimum wage increase is just another expense that will be passed on to the consumer. 

One larger chain office supply store is also doing their part with minimum wage increases, while not affecting employee numbers. 

According to Andrew Chavez, a supervisor at Staples, they are actually hiring some part time employees to provide much needed jobs. 

“It is an opportunity to get back to work during the pandemic. People are losing jobs and stuck at home. It is a matter of staying busy too,” he said.  

To stay competitive and deal with the wage increase, they were not able to raise prices on their top selling items such as printers and laptops— in spite of limited inventory. 

“The only alternative is to raise prices on smaller items,” Chavez said.  

Finally, Mary Ann Santrach with Rosemary-Duff Florist offered her perspective. She noticed that with the pandemic there is not a lot people can do. What they CAN do is send flowers. 

“We are here to assist and send emotions with flowers,” she said. 

Consequently, even though her sales were down for the entire year, Mother’s Day and Christmas were busier than ever. Sadly, many of them were condolences. 

And life goes on as best it can.

“People still want to get married,” Santrach continued. “Even during the height of COVID, we were delivering bridal bouquets. Relatives were sending flowers. It has been an interesting time. Funerals and weddings are there but not the norm. You kind of see what people are thinking. The cemetery has certain limitations. The funeral home next to us is undergoing major remodeling. They have had to come up with many different ways to conduct funeral services.” 

Weary and saddened by all of this as are many, she nevertheless maintains a positive outlook and remains grateful to her valued customers and employees.  

“Look at how people are so creative. That is why we are such a great country, because we all come up with creative solutions. American ingenuity! I don’t often know what to expect. I am trudging along keeping our employees employed,” she said. 

The caring and well-being of their employees seemed to be the theme of each one we interviewed. 

Like Super Heroes in a struggle for survival, employers seem to have faced each challenge with resilience and fortitude. These uncertain economic times have spawned ingenuity, resourcefulness, flexibility and creativity.  

No one anticipated Coronavirus would be the dominant issue of the past year and minimum wage almost an insignificant factor. 

Ultimately when dealing with the unexpected Santrach said it best: “ You fall back and punt!”

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