Some Small Businesses Against Minimum Wage Hike

By: Meredith Stancik Email
By: Meredith Stancik Email

For 1.7 million Americans, Tuesday could not come soon enough.

According to the Labor Department's Bureau of Labor Statistics that's how many people make minimum wage, and Tuesday their salary increases from $5.15 to $5.85 an hour.

The hike may sound good, but for some small businesses it could have detrimental effects.

At Jacque's in Bryan, a store that specializes in toys, books and educational supplies, it's usually all about fun.

However, a hike in the federal minimum wage has Jacque counting her pennies.

"I've been very careful in hiring summer help," Owner Jacque Flagg said. "I just didn't do it. Even though I needed to. I just wasn't able to, knowing the salaries were going to go up."

Jacque's products have prices set by the manufactures, so raising the price tag is not even an option.

"I'm going to have to be careful because it went up 70 cents and as with everyone else, they're all going to want an increase of 70 cents," Flagg said. "I won't be able to hire more people like I thought I was."

There is no break in sight for small businesses.

The minimum wage is set to go up each summer for the next two years, ending in 2009 at $7.25 an hour.

"If they're not prepared for this increase then certainly they're going to have to find that money somewhere," Michael Parks with the Brazos Valley Council of Governments said.

Experts say if businesses are not ready they'll have to find corresponding revenues to pay for those costs.

Most likely restaurants will increase menu prices and businesses will possibly eliminate positions.

According to the National Restaurant Association, the last minimum wage increase cost the industry more than 146,000 jobs.

"Each business is going to have to evaluate for themselves what their employee is worth," Parks said.

In the midst of the political season, minimum wage has also been a major issue among democratic contenders, candidates like John Edwards and Barack Obama are talking about raising the wage even more.

Experts say if that happens the effect awaits to be seen.

Someone earning $5.85 an hour would bring home about $12,000 a year before taxes.

The Federal poverty level for singles is just over $10,000 and for couples it sits at about $13,600 dollars.


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