CLEVELAND, Ohio -- The owners of Dave's Markets, who operate eight stores in the city of Cleveland, told members of City Council Thursday that a $15-an-hour minimum wage imposed only on Cleveland businesses would cripple their company and might require them to close some stores.
Steve Saltzman, vice president of Dave's, said during a Committee of the Whole hearing on the issue that some of the company's Cleveland stores meet the grocery needs of the community but are barely profitable. A voter-driven initiative to set the city's minimum wage 85 percent higher than the state's $8.10-an-hour rate would devastate the company and leave some neighborhoods without a grocery store at all, he said.
"This legislation could undo what Dave's has been doing over the last eight decades, which is provide easy access to fresh foods in the community's we serve," Saltzman said. "We take great pride in the fact that we have stayed in these neighborhoods where other retailers would not go or had abandoned. ... But without question, Dave's would not be able to operate as we are today if this type of legislation passes in the city of Cleveland."
Saltzman -- along with his brother, Dan, and his father, Burt – testified that they are not making an argument against raising the minimum wage. Rather, they are simply asking for a level playing field that would allow their business to remain competitive in the region.
The Service Employees International Union, through a newly formed local group called Raise Up Cleveland, had collected enough signatures of Cleveland voters in support of the $15 minimum wage to compel council to introduce legislation on the issue last month.
If council votes down the ordinance or adopts an amended version, the petitioners have the option of putting the original language on the ballot for Cleveland voters.
Council President Kevin Kelley opposes the issue, arguing that a minimum wage increase should be handled on the state level to avoid disinvestment in Cleveland.
Kelley said he plans on scheduling a hearing on the issue every week until council makes a decision on the legislation. The Saltzmans were invited to testify Thursday along with representatives from other area businesses. Here are some other highlights from the hearing:
Average wages at Dave's exceed $12 an hour
Steve Salzman said entry-level pay for Dave's workers is "in the $8-something range," but that employees quickly work their way into a respectable living wage with healthcare benefits and a pension.
The average full-time hourly rate is $18.27, he said. And the average among full and part-time employees is $12.60 – well above the current state minimum, but still below the proposed $15 an hour.
Dave's employee Nate Long, who has worked for the grocer for the past eight years, testified that he loves and appreciates his job and the opportunities the company has given him.
Council members took turns thanking the Dave's ownership team for all they have done to prevent "food deserts" in the community, for continuing to invest when other grocers fled and for employing Cleveland residents.
But some council members, including Jeffrey Johnson, Zack Reed, Kevin Conwell and Brian Cummins, said that despite their appreciation for the company, they believe the city's minimum wage could be increased incrementally and at a pace that is manageable for local businesses.
Survey says ... local businesses overwhelmingly reject proposal
John Colm, president and executive director of WIRE-Net, which is an economic development organization representing more than 400 manufacturing firms in greater Cleveland, said his agency surveyed its membership and found overwhelming disapproval of the minimum wage proposal.
About 90 percent of the 34 companies that responded to the survey said the new wage requirements would put them at a competitive disadvantage that would be nearly impossible to overcome. The other 10 percent of respondents already pay workers more than $15 an hour and would not be affected.
Colm said manufacturers would have to raise pay across the board to preserve the wage differential for workers with greater skills, experience and seniority. Many would turn to automation to curb costs, move their company over the Cleveland border or shut their doors altogether, he said.
He added that it's a misconception that companies can simply raise the prices of goods and services to account for higher wages. In today's global economy, customers in Cleveland can easily find more competitive prices with manufacturers around the world, he said.
Proposal would limit opportunities for youth looking for their first job
Tom Schumann, who runs the cutting tool company E.C. Kitzel & Sons on the city's East Side and serves as the board chairman at Cleveland's Max Hayes Vocational High School, testified that a $15 minimum wage would hurt young people's prospects when looking for their first job.
Schumann said that companies that would normally hire employees at entry level pay, invest in their training and promote them through the ranks, would instead look to hire more skilled and experienced workers at $15 an hour.
"The industry folks would have a hard time justifying paying someone that hourly rate to be an intern, trainee or summer help," he said.
Local businessman says he would have to close his doors
Michael D'Amato, president of Universal Heat Treating Inc., on East 93rd Street, said his family-owned business has been in Cleveland since 1965 but likely would have to shut down under the higher minimum wage.
D'Amato said his company enjoyed a 2.7 percent profit margin last year – but would suffer a 7.7 percent net loss if forced to increase wages to $15 an hour.
Moving costs would be too great, forcing the company to shutter its facility after more than 50 years, he said.
Council expresses mixed feelings
Council members unanimously support a higher minimum wage statewide. But they disagree on whether Cleveland should lead the charge by increasing the city's wages with the legislation under consideration.
Councilwoman Phyllis Cleveland said she sympathizes with the plight of the working poor and poverty-stricken residents in her ward, 30 percent of whom live in public housing. But hiking the minimum wage in Cleveland alone would destroy area businesses, she said.
"It's really not the solution to the problem at hand," she said. "On one hand, an increase would help some people. But realistically, we're going to hurt the smaller businesses that probably employ most of those people. ... If you're not competitive, you're going to lay off people, cut benefits, cut hours or cut and run."
Cleveland's comments elicited boos from the dozens of demonstrators who had filled the committee room.
"The true minimum wage is zero," the councilwoman responded. "We're going to hurt the city more than we're helping people with a Cleveland-only initiative."
Councilman Jeffrey Johnson, who recently proposed an alternative plan to phase in a $15 minimum wage, argued that the city must act now instead of waiting for the state or federal government to heed the call to action.
"The core issue is adults who are raising children and continue to be suppressed in poverty while we wait for the feds and state," he said. "... The impact of poverty in many of our neighborhoods is seen every day. These are Clevelanders fighting for their future, and I stand with them."
Where did those demonstrators come from?
The standing-room only hearing was packed with supporters of the Raise Up Cleveland movement, all wearing T-shirts promoting their cause.
But just before noon – an hour before the hearing officially concluded – the entire group stood and left the committee room.
Councilman Matt Zone then said he had been talking to one of the demonstrators who told him that most of the people in the group had traveled by bus from Columbus on the urging of the SEIU. The demonstrator who spoke to Zone said he was from West Virginia.
Anthony Caldwell, director of public affairs for SEIU District 1199, said in an email that Zone was "misinformed."
"No, we didn't bus anyone in," he wrote. "We don't pay anyone to protest or demonstrate. We used a bus to transport our members and supporters of Raise Up Cleveland."
In a subsequent email, Caldwell said the people who attended the hearing were from Cleveland, though some staffers "volunteered to transport people between our office and city hall."
http://www.cleveland.com/cityhall/index.ssf/2016/06/cleveland_business_owners_15_m.html
