Retailers Must Stand Their Ground
Convenience store retailers are accustomed to dealing with federal, state and local government rules and regulations that impact their business — oftentimes negatively.
Sure, many government regulations, such as laws restricting the sale of tobacco and alcoholic beverages to minors are more than reasonable if applied fairly and equally on all businesses. Many retailers don’t even get too worked up over higher taxes and regulations, as long as these rules don’t put them at a competitive disadvantage against other retailers. Most entrepreneurs are confident that given an equal playing field, they’ll come out on top.
But what I’m sure they don’t like is a government agenda aimed at crushing that very entrepreneurial spirit. It is with that thought in mind that I wrote a special online commentary for CSNews.com the morning after President Barack Obama’s State of the Union speech last month.
Entitled “State of Dis-Union,” I was sharply critical of the President’s speech, particularly his plan to use executive orders to advance his agenda. “Wherever and whenever I can take steps without legislation to expand opportunity for more American families, that’s what I’m going to do,” said President Obama.
I particularly took issue with his proposal that the government should force employers to “give Americans a raise” by increasing the federal minimum wage to $10.10 per hour. Like a lot of his rhetoric, it sounds good but falls short in the face of reality. Most employers are already struggling with higher costs, increased red tape and rising health insurance expenses.
Many retailers agree. In a statement, Matthew Shay, president and CEO of the National Retail Federation, said: “If you want to create minimum opportunities, then raise the minimum wage. Raising the minimum wage would place a new burden on employers at a time when national policy should be focused on removing barriers to job creation, not creating new regulations or mandates. It’s simple math — if the cost of hiring goes up, hiring goes down.”
Now, it’s a valid argument that the economy is not a zero-sum game and putting more money into the hands of workers will spur spending and result in improved sales for retailers.
As one CSNews.com reader wrote to me, “The fall-off in spending caused this recession. If people were more secure in their income and spent more often and received business more often, we would be better off.”
However, since fewer than 5 percent of hourly workers are paid the minimum wage, a mandated hike in labor costs will have minimal impact on overall spending. More likely, it will have a negative impact on businesses that employ people in entry-level jobs and ultimately hurt the people it is intended to help, Shay pointed out.
“This isn’t economic theory — when the minimum wage went up in 2009, half a million part-time workers lost their jobs,” he said.
What really scares me, and should scare retailers, is that the President plans to use executive orders on a whole host of matters — from energy policy to labor relations to food safety — to further his vision of an activist federal government.
As I stated in my online commentary, any vision not rooted in free enterprise, equal opportunity (not government-enforced equal outcome), and empowerment of the individual rather than the tactics of socialism is doomed to fail.