On the surface, this is a dilemma, especially for small businesses. But in reality, it’s a straw man argument.
If the copy shop owner is competitive with the national chain now, why would he not remain competitive if both he and the national chain both had to raise prices due to a uniform increase in the cost of labor?
Moreover, how is he competing now? If the national chain can use its volume buying power to undercut his prices, why hasn’t it put him out of business. Certainly a national contract for copying equipment offers lower costs of acquisition, maintenance and supplies (toner, etc.) than the independent shop could obtain. I was in the office machine business for several years and I know for a fact that national contracts come with very deep discounts. When a company can purchase truckloads of paper at a time, the cost per ream is going to be far lower than that paid by a shop owner that buys perhaps ten cases at once.
The independent copy shop owner is also at a disadvantage when other costs increase because those increases will have more impact on his business than they will on the national chain. National chains can actually “lock” prices for a period of time, so they won’t see a price increase at all while the independent owner is paying more. After years of little change, paper mills have announced increase of six to ten percent in 2018. Given the prices of 20-pound bond copy paper and increasing it be six percent and then applying a typical business markup to the increase, that means the shop owner has to raise his price per copy by at least a penny, even though no other costs have changed.
When the Affordable Care Act was being debated, “Papa John” Schnatter threatened to raise the price of each pizza by ten cents, or less than one percent, if the ACA became law. That was silly and it was no bar to the passage of Obamacare.
Look at the price of a Big Mac today and compare it to the price in 2009, when the minimum wage hit $7.25/hour. Yes, McDonald’s has increased pay for its employees and mandated that franchisees do the same, but many McDonald’s customers haven’t seen those increases and they must work longer to earn enough to pay for a meal of a Big Mac, small fries and a small drink that years ago cost less than a dollar. In fact, a minimum-wage worker today has to work nearly 40% longer than a worker in 1968.
Business owners have no problem dealing with increases in other costs; they can either cover them until it threatens their profits or pass the increases along to customers. It seems that only when it comes to paying more to employees do they seem to roll out the competitiveness excuse.