See the other article in this package: “Continuing the path to a $15 minimum wage is the right choice for families and our economy.“
It’s hard to separate the movies from the glitz and glamor of Hollywood. We sit quietly in darkened theaters and see heroes and monsters and everything in between dance across a massive silver screen. As the owner and operator of the historic, single-screen Commodore Theatre located in Portsmouth, my business exists in the real world, however. We were one of the first theaters in the country to include full-service dining in the auditorium. Governmental policies can make or break any small business. One of those policies is the General Assembly’s proposed statewide minimum wage hike to $13.50 per hour, that is being considered as part of this year’s state legislative session.
As a small business owner, I am very grateful that I can share my love of the movies and of bringing a great experience to our customers with my employees. Many of those employees are, predictably, teenagers just getting their feet wet in the world of the workforce. My staff and I can give them training in customer service, the nuts-and-bolts of the theater and the food service industries and how to provide an experience that keeps moviegoers coming back. A forced minimum wage hike would drastically reduce my ability to retain my current staffing levels, cutting jobs for young people that could have otherwise remained.
I provide competitive salaries and a great on-ramp into a career in cinema and restaurants. The proposed mandatory hike in the minimum wage would have a devastating effect on that, however, as it would force me to cut many of the positions that those young people rely on for that first or second-ever job. Most of my employees are 15 to 18 years old. They are still living at home with their families; they are not liable for rent, utilities or food costs.
The labor market is already pushing wages higher than our narrow profit margin will allow. To then have the government come in and reset the bar even higher could wipe this slim profit out altogether. I can understand a generalized concern that inflation is depressing the buying power of our dollar in this modern economy. That is just as true of the business I run as it is for the consumer. Labor accounts for fully one third of total overhead in our theater. The other two-thirds are taken up by costs like film rental, rent, food costs, utilities, fuel and credit card swipe fees.
Menu and ticket price increases are the natural response to these rising costs, but Virginia’s consumers have shown that higher prices easily scare them away from leisure activities such as movies and full-service restaurants. That’s setting up a dangerous stalemate. The Federal Reserve Bank of Chicago actually studied minimum wage hikes in the context of restaurant prices and showed a clear correlation between rising restaurant prices and hikes in the minimum wage. But consumers have been extremely clear that there is a maximum price that they are willing to pay for a movie and a meal. Our prices are either hitting that ceiling now or have already crashed right through it. Most full-service restaurants, even those with recognizable names, are small businesses; either independent concepts or franchisees. They do not have any way to offset the need for higher prices or to pivot their business models away from full-service. They will simply go out of business.
If an employee wants to demand a higher wage because they provide a better experience to the customer, or because they can increase sales, I would be happy to pay it. But to take that same person, performing the same work, producing the same bottom line and artificially increase their wage will annihilate the razor-thin margins that we are just getting by on now.
As an alternative solution, I propose that any minimum wage increase be applied to those 21 years of age or older.
Fred Schoenfeld is president of Commodore Associates, which owns the Commodore Theater in Portsmouth.
