One of the difficulties faced by small and independent businesses around the country lies in paying employees competitively with larger corporate firms. We see this especially in the retail sector, but it is a difficulty faced across the board. We can't be too naive about this- the problem often enough is a corrupt boss with no accountability to shareholders and little vulnerability to major lawsuits. But often enough small businesses simply can't afford to give employees the wages and benefits they deserve.
The wage rates in Austin are fairly low, outside of the state, university and tech sectors. A $10 an hour job is a lucky break for many. This despite the fact that a living wage for Austin lies closer to $14 an hour.
This is a problem. Social justice movements tend to concentrate on larger employers (you get more bang for the buck) and extremely corrupt small businesses. We have to develop ways to make smaller businesses in general more competitive as employers if they are to stand a real chance against corporate firms.
Now in theory, the more money circulating in an economy the better for everyone. Ideally a small business would see its pay increases reflected in higher sales. This is the old "Henry Ford" logic, pay your employees enough to buy your products if you want to build customer bases. The problem is that any given small business won't necessarily see this effect if the other small businesses don't respond in kind. Furthermore, if even a network of small firms decided to raise wages collectively, they would face the very real likelihood that those higher wages would funnel to nonlocal corporate retailers, service providers, and landlords.
There is a logical gap here- as employees are paid more, they have more to spend on the goods and services. But if small firms take the initiative themselves, they will surely lose out to large firms. So instead of entrenching a viable local economy, we are left at a stalemate that is resolved normally through increasing the minimum wage across the board. This is necessary, but at best it is value-neutral as to whether it supports small or large business.
There is another way however, and that way is provided by local currencies.
Let us suppose that on top of existing base pay, local employers added an extra $3-4 dollars worth an hour for their employees. However, instead of being issued in dollars, let us suppose this wage boost is issued in a local currency that is only accepted by those very same firms. All of the local, independent firms in a network issue the wage increase, but those increased wages can only be spent within that local network.
In this situation, funds lost by the participating firms in higher pay is immediately spent at those same firms. This gives a certain advantage to small firms networked together and operating within a larger economic framework. Their own customer base will spend income from nonlocal employers, while their own workers will spend some part of their income within the network necessarily.
It is important to keep in mind that disequilibriums will exist for firms in the network that cater to exclusively high-end clientèle. In Austin the independent business community seems to cater to income groups across the board, so this shouldn't become much of a problem. It can also be offset if landlords participate in the network as well.
In conclusions, by offering an hourly "local currency wage" on top of standard dollar wages, networks of independent firms may be able to dramatically increase the quality of life of their employees while at the same time creating a strong and stable customer base.