June 20, 2013

Another View: Minimum-wage hikes eliminate real jobs in the real world

A columnist's argument sounds good in theory but doesn't address how business works.

By Joe Palmieri

I always find it amusing that people who teach theory and live in the sheltered world of academia try to explain the facts of how the business world works.

Here is a business lesson for University of Southern Maine professor Susan Feiner, in response to her highly intellectual piece in the Maine Sunday Telegram, "Working for peanuts" (June 16).

The business climate in Maine, for many small businesses, is average at best. Our population growth is stagnant and our job growth is laughable because of the cost of doing business in Maine.

That means many of our best students, some who probably took your class, are leaving the state in an effort to repay crushing school loans they needed to learn about simplistic and tired theories that bear no resemblance to what small business owners face in practice.

Professor, please take notes, because this is the way it is. Businesses, like mine with 10 employees, allocate a certain amount of money for payroll, one of many costs.

If you raise the minimum wage in a climate where we can't raise prices, small Maine businesses will not expand and will not spend more money on employees because there are so many other costs that did not fall. So what we will do is reduce the number of employees, and if that does not work, we will close.

That, Professor Feiner, is not theory. It's a fact, and I did not need a one-year sabbatical to figure it out.

Joe Palmieri of South Portland is the owner of Chicago Dogs in Scarborough.


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