June 3, 2015

The Bare Minimum – a Small Business Perspective on $15 Per Hour

Filed under: Uncategorized — Jarek Steele @ 9:37 am
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I don’t pay my employees enough.  That’s hard to admit.

I mean, I don’t cross picket lines, I’m a patient driver, I garden vegetables and work in my wood shop, I love animals and people, and I can get along with just about anyone.  I’m a good guy.  And my staff are not just employees to me. I see their talents, their struggles, their hopes and dreams – their lives mean something to me.  They are my friends.

They’re no slouches, either. Among us we have published writers, artists, aspiring lawyers, career booksellers, political activists, bartenders, actors and photographers.  My store is not a place one goes to wash out – it’s a place one goes to click in.

Still, I know they (we) struggle. I’ve only managed to bring the starting salary about .75 above minimum plus free health insurance, book credit, bonuses at the end of the year and an atonal cacophony of booksellers singing happy birthday for each person once a year. It’s enough to make most happy, but not enough to make anyone comfortable.  It’s not even enough to make most people solvent, and it bothers me.

I’ve had an Excel file titled “Payroll Increase Worksheet” active on my desktop for years.  A few times a month I open it and stare at it, willing it into fruition.  I saw a headline today that our mayor wants to increase the minimum wage to $15 per hour by 2020, so I opened my worksheet again.

I’ve heard people get angry that someone working at McDonald’s would make more than some teachers do now with a wage increase.

I’ve seen Facebook posts about forcing these huge corporations with mountains of cash to be decent to their workers.

We argue over worth – who deserves which wage, what job merits more than another and accuse each other of greed and laziness. It’s an argument rooted in the insecurity that we’ll somehow be left behind, that our hard work won’t be deemed as worthy as the next.

Nobody wants to be conned. Nobody wants to be left holding the bag.

I’m not the kind of guy who thinks $15 per hour is out of line for a minimum wage for anyone. In fact, I think the minimum wage should be tied to the rising cost of living. I think of many of my relatives (and myself in past jobs) making the minimum and know that standing at a fry vat doesn’t seem glamourous or heroic unless you know that the person standing there supports kids or parents or sisters and brothers by serving you your extra value meal. Why don’t they deserve a fair wage? What have they done wrong?

And yet, when I think of giving an across the board raise of nearly 45% in my own business, my stomach clinches. Before you encourage me to take less home, I’ll tell you that I’ve had only two raises since I became an owner. I’ve been with the store 13 years.

Before you tell me I shouldn’t be in business if I don’t want to pay a living wage, I’ll tell you that I’ve struggled deeply with that, and almost agreed with it until I realized that I was falling into the same trap as the argument I described above – that somehow my job of keeping a worthy cultural institution afloat was somehow greedy if I struggled with payroll. It’s something I know well from my own life- poverty shaming- and it’s cruel.

So I have a dilemma that I don’t think I can solve here, but let me just talk this through.

Here’s how the math works in small businesses like mine:

  • A hardcover book retails at about $25.
  • I pay the publisher $13.75 for that book.
  • The remaining $11.25 is used to pay the rent, electricity, gas, insurance, payroll, licenses, advertising and other business costs.
  • Many people buy paperbacks, which retail at about $15 per book. $8.25 of each book goes to the publisher.
  • Most independent bookstores operate on a net profit of about 2% (or .50 of that hardcover book and .30 of that paperback).

Yes, it’s tight.

I won’t publish the finances of my store, (although my staff gets a full report every month), but here’s an image of a payroll calculator created by the American Booksellers Association to illustrate what increases to payroll do to a store’s income. (Note, these aren’t actual figures from my store.)

Hypothetical budget before increase.

Hypothetical budget before increase.

Hypothetical budget after increase.

Hypothetical budget after increase.

So here’s the dilemma:

We can’t raise the prices of books the way a restaurant can raise the prices of hamburgers.  My hands are tied there. In fact, in the age of Amazon, people want a discount.

We work on a pretty tight budget and have an excellent relationship with our landlord.  Our credit is good. Our relationships with our community are excellent.  We do over 250 literary events per year – more than anyone else in the city – and we’re open 7 days per week. We sell to businesses, schools, churches and other places.

Business is good, and we need all 15 full and part-time people on our staff plus two working owners.

I’m the master of making shoestring budgets work, and I’m willing – ready – to give my employees the salary they deserve.  


The question is how we can raise the minimum wage to meet the cost of living and keep businesses like mine afloat.  After all, nobody gets paid if there’s no business.

A Few Thoughts:

In order to make this work, we’ll have to be sane about how to do it and make the playing field a bit more level.

  • If the minimum wage in St. Louis is higher than it is a mile away in University City, new (and existing) small businesses would find it hard to justify a higher cost of doing business in the city. My mandatory minimum wage would be higher than every single other bookstore in the area. How’s that for an unlevel playing field? Yes, I’ll stick with my city. I love it. But my city needs to stick with me and work with me to make this attainable.
  • The increase needs to be gradual.  Adding $162,240 per year to a tight budget like above would be catastrophic.  We have to have time to adapt.
  • Make other fixed expenses easier to reach.  Give tax and other incentives to landlords to rent to locally owned independent businesses at reasonable rates.
  • Reduce fees and taxes for small businesses like ours so we can use that money toward payroll.
  • DON’T provide tax incentives and rebates to huge out of town corporations to come to our city/state and displace existing local businesses.
  • Collect sales tax from Amazon and other online retailers.  It isn’t a new tax. In fact, we pay it every month, but out of state retailers don’t have to – which is not only supremely unfair, it doesn’t make any sense.  According to Caroline Bruckner of Kogod School of Business at American University, if every state including Missouri collected the sales tax they were due, the revenue from online sales would be 20 Billion dollars a year.  It would not only level the playing field for businesses like mine, it would generate tons of income for things like schools, roads and community development. More on that subject can be found here.
  • This next part is simple, but key – shop here.  If people are making more money, that money needs to be spent locally. Local businesses return more then three times as much money to the local economy than chain stores. And believe me, Amazon doesn’t care about replacing the bridge on Kingshighway, and they definitely won’t bring your favorite author to town so you can meet them.
  • (added 6/10/15) Take into consideration the entire benefits package.  My store offers free health insurance including health, vision and dental, up to three weeks vacation plus one week of sick time per year. Investing in our staff’s health and well being creates a return that benefits everyone involved. Less stress on the worker, more productivity from healthy employees and better morale overall. Maybe instead of looking at a strict cash minimum, credit could be given for the value of the entire benefits package.

It comes down to this – It’s not too much to ask to raise the minimum wage. It’s not too much to ask of our society to protect and support its workers. It’s not too much to ask of our community to support its small businesses. It’s not too much to ask to respect both sides of this issue and come up with a good plan that works for us all.

We’re smart people. We can figure this out.

We have to.

September 26, 2013

A Small Business Response to Obamacare

Left Bank Books pays 100% of our full-time employees’ health insurance premium.

I’d like you to let that sink in for a moment, because this fact is one of the reasons I decided to become an owner of this St. Louis institution.  

I’ll also let you in on another secret – by the end of this year, my bookstore will have paid $270,550 over the past five years for health insurance.  Our group is (obviously) small; an average of 12 people are enrolled.  Each bookseller’s premium averages out to about $415 per month.  We each have a $5000 deductible.

To put that into perspective, the average paperback retails at about $15.  We pay about $8.25 to the publisher, leaving us $6.75 to pay all other expenses (rent, payroll, electricity and, yes, health insurance).  That means that we have had to sell 40,082 paperbacks at full cost to pay for health insurance alone since 2009.  

The message being blasted from the rooftops of opponents of Obamacare this week is that those figures I just gave you are precisely why Obamacare is unfair – that it will put a burden on individuals and small businesses like mine, and force us to increase what we spend on Health Care.  They don’t want you to know that many small businesses like mine actually think that having health insurance is an important aspect of having a functional, happier, healthier, more productive employee.

In fact, the state of Missouri rejected the whole idea, forcing the federal government to manage the healthcare exchange here and went one step further and forbid “navigators” from even helping anyone obtain insurance from the federal exchange.  That means that not only are our state’s citizens on our own, but the public servants who we pay with our taxes cannot even talk to us about this.

I’ve got to say, I’ve been worried.  That’s what happens when information is censored before it reaches you. When the only message you hear is the one that frightens you, the impulse can be to dig in and resist.  But now some actual facts are making it into this debate.  I found this chart this morning on CNNMoney:

The Obamacare premiums will cost less than predicted, according to data released Wednesday by the Obama administration.

Take a look at the middle set of figures.  The monthly premium for someone in Missouri is $220 – $195 per month less than what we currently pay.

Granted, I haven’t seen the policy or what the deductible will be.  Granted, this set of figures applies to individuals, not small businesses on the SHOP Exchange.  Granted, my company has bigger battles on its horizon as Amazon sucks the economy into its vortex.

But I can’t help but be hopeful today.  Even if the deductible is high, it can’t be higher than the ridiculous amount we’re responsible for now.  Plus, the rates for small businesses are bound to be just as good as individual rates.  As for Amazon, that’s a whole other subject about which I’ve been very vocal.  If you’re interested, you can look at ABA CEO Oren Teicher’s August 8 letter to the members of the organization.  He sums it up nicely.

I’ll write again after October 1, when I’m able to have a look at the exchange, but for now, for this small business in the reddest of all red states – count me in.

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