CHAMBER TALKS SMALL BUSINESS WITH RON GETTO Local Business Owner Tackles Flagstaff’s Wage Mandate Head-On yet the majority of my employees don’t fall into that category. As a result, our costs have gone up dramatically. A year ago at this time our hourly wage earners were getting $11 an hour; now they earn $15.50 an hour. ED: Increased costs lead to what result?
The @7,000ft magazine editor (ED) sat with Starlite Lanes owner Ron Getto to get his take on the City’s wage mandate, local employment, and life in 2022. ED: Let’s get right to it. Rumor on the street is you’re paying employees higher hourly wages than what is currently mandated. Is that true? RG: Absolutely. While I didn’t vote for the living wage, I’ve chosen to institute the 2022 living wage for all of my employees. I have a few employees who legitimately deserve to earn this wage (who are single parents, etc.);
RG: As an entrepreneur who takes risks every day, I resent being told how to spend excess profits. In the past, I have chosen to use those profits to offer healthcare to all full-time employees—so healthcare has been their right. Even though it’s expensive, it’s an example of how I chose to spend my profit. I have considered discontinuing healthcare, but I made the decision to keep it because the employees receiving the benefit truly need it. ED: Is that the only result? RG: Oh, no. Not by a long shot. The wage increase has cost me over $50,000 annualized every year. Discounted annually into the infinite future that equals $500,000. In other words, the value of my business has gone down $500,000 to a buyer because of the increased labor costs. Every business goes down when profitability goes down.
RG: The living wage mandate has made it too expensive to hire high school students anymore, and it’s with real sadness that I can’t offer that since it is really shortchanging our youth. Starlite Lanes is willing to take a dramatic hit to our profitability for a year to see how we can operate under this burden, and it’s fairly certain that the laws of economics will apply where we buy fewer hours of labor at higher labor costs. ED: Anything else? RG: Ironically, the wage increases have pushed my best employees to the back of the line; instead of giving my full-time business partners raises in my business, it goes to my support staff. By going to the 2022 wage today, I told them that it would be the last wage raise and that in January I would start focusing on my best full-time employees who are receiving healthcare. One more item, I want to warn other small businesses how soon we will experience the 2022 living wage, with a 25% labor increase in just the next 18 months. You have to get ready and understand what it will mean for your business as soon as possible. ED: Thanks!
ED: Has your strategy impacted who you hire?
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928-527-3223 QCoffice is a Division of Quality Connections Inc., a 501(c)3 nonprofit organization, and an Arizona Qualifying Charitable Organization (QCO: 20310) GREATER FLAGSTAFF CHAMBER OF COMMERCE | SEPTEMBER 2019 | VOL 5, ISSUE 9
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