Minimum wage debated
Not everyone is thrilled with President Barack Obama’s call in his State of the Union address to raise the minimum wage.
The Fair Minimum Wage Act of 2013, introduced by Sen. Tom Harkin, D-Iowa, chairman of the Senate Health, Education, Labor and Pensions Committee, and Rep. George Miller, D-Calif., the top Democrat on the House Workforce Committee, introduced the act which would raise the federal minimum wage to $10.10 per hour by 2015, in three steps of 95 cents each.
Sen. Robert P. Casey, D-Pa., a co-sponsor of the legislation, said he expects the Senate to vote on it in March.
The federal minimum wage has been $7.25 per hour since July 2009. Twenty-one states have a minimum wage above the federal figure – 13 states raised their minimum wage effective Jan. 1 – and 27 states including Pennsylvania have a minimum wage of $7.25 per hour. Washington has the highest rate at $9.32 per hour.
The jump to $10.10 per hour could be devastating, said Mike Hofer, executive director of the Central Blair Recreation and Park Commission.
“I don’t know how we could possibly function with the finances we have coming in here,” Hofer said. “It would create a ripple effect to our programs, fees and league fees across the board. We barely get by now with what we do and that would increase it by almost $3 an hour. I don’t see any other option but to increase prices. That would be our source of revenue.”
Hofer said it took the commission about two years to recover from the last hike in the minimum wage in 2009.
The increase also would have a tremendous impact on Meadows Frozen Custard Inc. of Duncansville.
“We only have two options to offset it – increase prices or reduce hours for our employees. I don’t know what else we can do,” said partner Joel Meadows.
“In this business, these are first-time jobs for 98 percent of our 16-year-old kids. Instead of using nine kids I may have to cut back to eight kids,” Meadows said.
The increase would be detrimental to service businesses, said George Stevenson, chief financial officer at Stevenson’s Dry Cleaners, Altoona.
“We are labor intensive,” he said. “A large part of our cost is labor. There could be a point if it goes through, you could get less volume. People may change their lifestyle or their wardrobe and may not buy stuff that needs to be dry cleaned.”
Stevenson said what he must pay in salaries is not the true cost of labor to an employer.
“There are employment taxes and ancillary costs tied to the payroll. There are a lot of things that factor in. $10.10 an hour balloons to about $14 per per hour when all is factored in,” he said.
Any time the minimum wage goes up, it increases the overall cost of doing business, said Phil Sukenik, vice president of human resources at Hoss’s Steak and Sea House.
“I think it is always a challenge any time they increase the minimum wage to make sure we don’t increase prices too much for our guests,” Sukenik said. “We like to stay competitive. We try to balance doing the right thing for both our employees and our guests.”
Tom Kopriva, executive director of the Hollidaysburg Area YMCA, said he is not sure how the economy will be able to adjust to the minimum wage going up.
“It will also effect those who are making between $7.25 and $10.10 and the people making about $10 now,” Kopriva said. “They will then be considered minimum wage. When you are considered to be minimum wage it makes you feel undervalued. There will be a ripple effect that goes pretty far.
“Without a doubt, we would need to increase our prices.”
Officials of Sheetz Inc., the Altoona-based convenience store chain with 466 stores, are not sure how an increase in the minimum wage would impact their business.
“We start our store employees above minimum wage, so it is really too early to tell how a change like this will affect our overall business,” said Travis Sheetz, executive vice president of operations.
“We remain committed to continuing to pay in the top 10 percent of similar retail employers and will track the employment markets closely as they react to any change in federal law,” Sheetz said.
Greg Sheehan, owner/ operator of the Holiday Inn Express, Altoona, calls the minimum wage an “arbitrary number.”
“It benefits the receiver of the wage only for the amount of time it takes businesses to adapt their expenses to cover that increase,” Sheehan said. “As a hotel, if we receive a 20 to 30 percent increase in our wages, then it becomes necessary to raise our rates to adapt. Within six months the benefit goes away because everything else will go up to cover the cost of operations.”
“Our starting wage is above minimum,” Sheehan said. “If they tell me I have to increase my wages, something has to give. I may have to make the employees pay more of their health care costs.”
President Obama signed an Executive Order on Wednesday to raise the minimum wage to $10.10 for federal contract workers. The Executive Order will benefit hundreds of thousands of people working under contracts with the federal government who are making less than $10.10 an hour. It also will improve the value that taxpayers are getting from the federal government’s investment.