Just coincidence, but you happen to own a mythical business where all employees earn Washington’s minimum wage of $9.32 per hour. This is a small business, often struggling. You hire people with few or no skills and little or no experience and give them a chance to show they can do something valuable. By its very nature this business straddles the line between profit and loss, success and failure.
Now comes Gov. Jay Inslee and the Washington Legislature to order by decree that you increase your employee wages and your labor costs by 27 percent instantaneously. That is what a $2.50-per-hour hike in our highest-in-the-nation minimum wage will do, the top end of the range Gov. Inslee proposed in his State of the State address. This is an order, given to all without regard to extraneous factors like profitability or ability to pay. Worker productivity will not change. Their efforts will produce no more value than they did the day before. Their labor will produce no more profit. The products they make or the services they provide will generate no more revenue, but the government has declared they will be paid 27 percent more to do it. Your biggest business expense, employee wages, had jumped by more than a quarter without warning, while your income changes not at all. You have to make adjustments or give up. What gives?