Pos­si­ble boost for busi­ness

Los Angeles Times - - MONDAY BUSINESS -

Gina Schae­fer prides her­self in tak­ing care of work­ers. The owner of 10 Ace Hard­ware stores in the Wash­ing­ton, D.C., area pays her 215 em­ploy­ees at least $10.50 an hour. That’s a buck more than the legal min­i­mum in the cap­i­tal and much more than sub­urbs in Mary­land and Vir­ginia.

Go­ing to $15 an hour, she says, might ac­tu­ally help in sig­nif­i­cant ways. She’s learned from ex­pe­ri­ence that pay­ing more can boost the bot­tom line by lead­ing to a hap­pier, more pro­duc­tive work­force.

Be­fore Schae­fer vol­un­tar­ily bumped up the start­ing wage by $2 an hour in 2011, she was re­plac­ing about 80% of her em­ploy­ees ev­ery year. That’s since dropped in half, sharply cut­ting her train­ing costs and boost­ing pro­duc­tiv­ity.

But a higher min­i­mum wage would cost Schae­fer in other ways. With less turnover, the av­er­age age of her work­ers would prob­a­bly tick up a bit from the 19-to-27 range to­day. And older work­ers are a lit­tle more costly, even if they are more pro­duc­tive and de­pend­able.

La­bor ac­counts for a hefty 20% of Schae­fer’s to­tal ex­penses. If that rises and her sales don’t, she says she would look at order­ing more higher-mar­gin prod­ucts, like cheaper-priced tools. She would also prob­a­bly raise some prices.

Schae­fer, 44, says she also may have to in­crease how much work­ers pay for their health­care pre­mi­ums, now 20%. And she and her hus­band, who man­ages the books, would prob­a­bly take pay cuts. Nor does she rule out the pos­si­bil­ity of cut­ting jobs.

Even so, she still thinks that go­ing to $15 an hour makes good fi­nan­cial sense, as long as it’s not raised too quickly. “If peo­ple are mak­ing more money, maybe they won’t have to shop at Wal-Mart,” she says, “and they’ll shop at my store.”

Amy Davis Bal­ti­more Sun

Gina Schae­fer

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