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Rural thoughts on raising the minimum wage

Many states have raised the minimum wage today. 18 in fact. Several of them to over $10 an hour.  Read about it here

Now don’t get me wrong- I don’t begrudge anybody a chance to make a decent living. I would have loved to be on the receiving end as a worker and as an employer would have been ecstatic to be able to pay my employees more.

3789566982_320590780eBut I do believe that these states did not really try to take their rural communities into account. In particular isolated rural communities.And if they did, it was only to spare a second to think to themselves ‘they don’t have enough people to matter’..

I’ve lived in several incredibly tiny rural communities in a couple of the states listed. We owned a business in one.  A little town of a hundred  people, 135 miles from the city (700K ppl), and 45 miles to the nearest ‘urban’ center (3500ppl) . Our nearest communities had 27 and 300 people respectively.  Those numbers have not fluctuated all that much in the years since we left.

Many rural businesses cannot sustain a fair sized increase in minimum wage. -Not even if it’s over a number of years.

I know many will say “Oh- What’s a buck or two?” – A couple dollars multiplied by 30 -40 hours a week adds up.  On top of that the employer will now pay a higher unemployment tax, FICA and workmans comp.  – all of which can hinder the ability to pay an employee a higher wage.

Those same dollars can also spell the difference between whether that rural community continues have a hardware store, market, café etc…

Here are some scenarios–  Bobs Hardware is a busy little place servicing several tiny communities. Bob needs help.- he hires Joe to come work and pays him the elevated wage. Joe is happy. For a time. -You see, Bob has to either sell more or cut Joes hours to afford the wage.

Bob can’t really sell any more than he already is because he doesn’t have the same traffic an urban or city business attracts. Bob is 145 miles from people. His customers are the farmers, ranchers and families in his area. And they can only buy so much.  So Bob cuts Joes hours.

Or.… Let’s say Bobs Hardware already has several employees. The minimum wage goes up. Bob has to choose. Does he cut everyone’s hours? Or does he let two go and keep Joe? And if he keeps Joe, is Joe going to up and quit because Bob expects him to work harder for the new wage?  Even if he pays a little more than the ‘new wage’- Joe may eventually build up resentment of having to do more work.

Or… Bobs Hardware employs Joe. The wages go up.  Bob can no longer afford to have even one employee. So Bob, who’s already run his rural business for decades l6939468522_bc879c5f3f_bet’s Joe go. Bob can no longer do all the work himself and cuts his business hours which in turn loses some revenue. Eventually Bob just throws in the towel and closes leaving communities without their only hardware store AND an empty/shuttered building on Main Street.  That in turn leads to lower property values for the entire community. And potentially lost revenue for the gas station, since the local farmer filled fuel on his way home from Bobs Hardware and grabbed a coffee at the cafe. In the meantime, Joe was let go and job opportunities in a town of a couple hundred are slim. Joe has moved to the city for work taking what disposable income he had with him, and quite possibly his kids out of school and money out of the donation plate at church that helped fund local causes or 4-h etc. 

Or… Bob raises his prices significantly in an effort to afford his wage increase and in the process actually loses business. – Many rural folk will save ‘it’ for a trip ‘to town’ when ‘it’ is no longer cost effective to buy locally. At the same time, when those folks go to town they will spend the entire day and do ALL their shopping and stop at the café to boot, bypassing their own community all together.

I have witnesses every one of these scenarios over the years.

**99% of small business owners in rural communities WANT to pay their employees better. They genuinely love their towns and the people within and want them to survive and thrive.

**A huge number of those same employers work tremendous amounts of hours themselves “FOR FREE” so they CAN employ someone from the area. (we did)

**Sometimes in lieu of money they find other creative compensation.  We did.  If we hadn’t we wouldn’t have been  able to be open enough hours to even pay ourselves a meager living.

So while I don’t necessarily think the new wages are bad, I do think they will force some hard decisions in rural communities.

In equal numbers, some businesses will find a way and some will not. Some will close. Some will hang on- for a while, maybe longer. Some will thrive.

Next time we’ll talk about some of the creative ways we’ve seen businesses in tiny communities thrive.

~Katy~

Katy is a rural and small town consultant with Tait and Kate Consulting  ~Helping rural communities grow and thrive~

 

 

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5 reasons small towns should think regionally

It is  getting harder and harder for many small towns to hang on. State and federal funding is drying up, resources are disappearing and people have become complacent. By working together, small towns can revive themselves and head in a new direction.  Though there are  many, here are  my  reasons small towns should think regionally.

1-None of us are getting any younger. Things happen. Ask yourself What IF? What if you couldn’t just hop in the car and drive 50 miles to market?  Wouldn’t it be nice to walk down the street and grab a birthday card or a gallon of milk, or meet your friends for coffee? Or to just go the 10 miles to the neighboring town that has  what you need?

Ask yourself, If you couldn’t just drive into the city, is it a reasonable expectation to have your child or friend take an entire day off of work, come from the city to get you, take you back to the city to get that handful of items you had to have, and then drive you back home and head right back? That would be an entire day and over 200 miles of driving.

Just because you CAN drive in, doesn’t mean you need to or even want to. And we all know someone who really shouldn’t be behind the wheel to start with!

2-Shared resources.  One town has the lake, one the hospital, one has a huge yearly event , one a cafe, one the lake, one a motel. How can you use your neighbors resources to enhance your own? 

You could advertise your motel at the same time the next town is having AppleFritter Days. 2205027805

The tiny town of Aladdin, WY (population 15!) has a 100 year old store. And that’s it.  Aladdin is 20 miles from Belle Fourche SD.  They have built their  business around tourism to Belle Fourche and Sturgis and Devils Tower. Aladdin uses the simple 20140628_123515principle of Buy, See & Do to capture their audience. Aladdin uses the nearby towns  resource of people, hotels and more.

If a town of only 15 people can do it, so can you!

3-Events~ events draw people from all over. Take advantage of it. Even tiny events provide an abundance of trickle down economics. When they drive to your town, people will stop to fill their tanks before leaving, they will spend money in your café, gift shop, roadside stands, etc.

It doesn’t matter if you have a cartwheel contest, a parade, a farmers market or some huge event. Just do something. Once people know that your community has events, they will spread the word bringing more people the next time.

4-Small towns are inter-connected by family ties. Most everyone who lives in small towns is connected to other nearby communities by family. This means traveling back and forth. Shared knowledge and histories. Capitalize on it.

Make a traveling history exhibit featuring the townspeople, host a Cousins Day or something else crazy.

When Aunt Dorothy comes to your town for  little Jr’s birthday party, dimes to dollars she will stop at the local store  to grab a gift or a bottle of wine.. Just like when you go to that pot-luck  the next town over, you’ll probably stop in their market and get some of that potato salad to take with you.

5-Small business succeeds. When a small town thinks outside of its borders, businesses grow and thrive. By sharing  and collaborating with other nearby communities, you grow your customer base.

When you grow your base, more people hear about you.  The more they hear about you, the more excited they get to find out what’s new in your community.  With more people coming to town, the more the possibility of a business being able to expand or hire someone or for a new business to start.  How exciting would that be?

What ideas do YOU have to think regionally?

~Katy~

 

 

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