When the COVID-19 crisis hit, Colorado Cleaners lost nearly half of its business almost overnight.
“For small businesses, I feel, I pray that they make it, especially with what’s going on,” said operations manager Sheriece Furness.
She says with more people working from home, fewer people are getting their clothes cleaned professionally.
This drop in business has carried over to a new year when several states, including Colorado, increased their minimum wage.
“It went from $12.85 to the $14.77,” Furness said. “So, that was a big increase.”
That increase in employee pay is now being passed on to customers by some businesses.
“For us, it creates an issue that cascades throughout the entire company,” said Cort Battles, owner of Colorado Cleaners.
Battles says he was forced to raise prices 15% on January 1, 2021, when the new minimum wage went into effect. With higher labor costs, he also had to cut employee’s hours.
“As much as we’re believers in minimum wage and livable wage for employees, during the pandemic, it’s just been a huge impact financially,” he said.
The current federal minimum wage is $7.25 an hour. Two-thirds of Americans supported raising the federal minimum wage to $15 an hour, according to a Pew Research Center survey in 2019. And while the Biden administration is pushing to make that happen in 2021, critics say now is not the time.
“The consequences are so clear that it is going to reduce employment at the very time that we need people back in the labor force,” said Luke Froeb, Ph.D., professor of economics for the MBA program at Vanderbilt University and the former chief economist for the Federal Trade Commission and the United States Department of Justice.
He says while an increase in minimum wage pay could help some people out of poverty, it could end up costing even more Americans their jobs.
“I just wish people would think with their heads and not their hearts,” Froeb said. “It sounds great, ‘hey, let’s raise the minimum wage, it’s a free lunch.’ But there are consequences to that."
For Colorado Cleaners, the consequences are clear.
“To absorb a minimum wage increase like this right now has an impact,” Battles said.
He has already started spending his own personal savings to help this small business survive. And in the last nine months, he’s had to cut his staff from 22 employees to now 10, with Furness thankful for the work
“We’re blessed that we still have a job,” she said. “And thank God for the people who did get the raise.”