As if there aren't enough economic probs for small business owners, the minimum wage is set to increase nearly 12%.
Take the case of Phyllis Tampling, owner of Jim's Restaurant in Prattville, Ala. Food prices have soared (hard to imagine the price of potatoes going up 75% in one week) but she's been unable to pass the costs on due to competition not only from other restaurants, but also from prices at the pump and the checkout line. Now she's looking at mandated salary increases. Those who aren't on minimum wage will also have to get raises in order for them to stay ahead of those who are. It's a ladder of wage inflation.
I wonder how it will all balance out at Jim's Restaurant. Higher wages would mean fewer profits. Raising prices would mean fewer sales and fewer profits. Refusal to raise wages could lead to employee turnover which also would eat into profits.
The market will work it all out one way or another. My prediction is inflation and further economic contraction.
You have to hand it to the little guys--the Phyllis Tamplings of the world--for sticking with it.