Minimum wage hike might hurt business

January 22, 2006|By CANDICE BOSELY


It likely is not going to significantly fatten anyone's wallet, but starting next month, those making minimum wage will see an increase in their paychecks.

A few local business owners had differing opinions on how increasing the minimum wage from $5.15 to $6.15 an hour will affect them.

With dishes rattling in the background, Jamie Burtner said the increase could negatively affect operations at his two businesses, Red Byrd Restaurant and Keedysville Country Store.

"We have a lot of employees on minimum wage. As a businessman it's going to hurt me," Burtner said. "It's good for the employees, don't get me wrong."


Burtner said some of his employees, including cooks, already receive more than minimum wage, but those making $5.15 an hour include busboys and hostesses who often are high school students.

Plans to hire additional employees likely will be put on hold, especially given that business in January and February tends to be slower than usual, Burtner said. He also might have to reduce existing employees' hours to make up for the difference in payroll, he said.

The wage increase will take effect in mid-February.

Maryland became the 18th state to require a higher minimum wage than the federal baseline Tuesday when the state Senate voted by the required three-fifths margin to override Gov. Robert Ehrlich's veto of the bill from last session. The House voted to override the veto the previous week.

Two drawbacks cited by Burtner - reducing employees' hours and refraining from hiring additional employees - were echoed by opponents of the bill.

About 26,000 Maryland workers earn the minimum wage, according to state estimates.

A political move?

Proponents of the bill cited the need to help families, saying raising a family on $5.15 an hour is not feasible.

Ken Trenary, who owns Family Video in Williamsport, agreed.

"It won't affect us because we pay more than minimum wage anyway," Trenary said. "I didn't think you could get anybody to work for (minimum wage) today."

Trenary said his three employees already make more than $6.15 an hour.

Trying to raise a family on even $6.15 an hour probably would be difficult, especially in this part of the state, said Trenary, who wondered whether the change represents little more than a political move.

"I really don't know what they think they're going to accomplish," he said of legislators who voted for the bill.

Bobby Resh, co-owner of Richardson's Restaurant on Dual Highway in Hagerstown, said he doesn't expect the increase to affect him too much.

"We'll just work with it," he said.

Only a few of his employees, most of whom are high school students with little to no work experience, make minimum wage, while his other employees make more than $6.15 an hour, Resh said.

Resh said an employee who now starts work at 5 p.m. might be asked not to report until 6 p.m. once the new wage takes effect.

"I could see streamlining job descriptions so hours are not as hefty, to match a certain percentage of payroll versus sales," Resh said.

Job market demands require paying more than minimum wage, especially in the restaurant field, said Resh, pointing out the number of new restaurants that have opened in recent years.

"It has grown many times fold," he said.

A precarious situation

A person working 40 hours a week would earn $10,712 per year at the $5.15 hourly rate and $12,792 per year at the $6.15 hourly rate.

The minimum wage of $5.15 was set in 1997.

According to the U.S. Department of Health and Human Services, the poverty level for a single person is $9,570; for a family of two, it's $12,830; the level for a family of three is $16,090; and for a family of four, the level is $19,350.

Brien Poffenberger, president of the Hagerstown-Washington County Chamber of Commerce, said minimum wage should be set on a federal level rather than state-by-state.

Doing so ensures parity, he said.

Determining minimum wage on a state-by-state basis places Washington County in an especially precarious situation, given that it is sandwiched between West Virginia and Pennsylvania, both of which have kept the $5.15 minimum wage intact.

Virginia also has a minimum wage of $5.15 an hour.

A business or company considering opening along the Interstate 81 corridor and that is highly prioritizing wages might not consider Maryland, Poffenberger said.

More employees than those receiving minimum wage are affected. When employees who receive minimum wage receive a $1 pay increase, other employees making more will seek a comparable increase, Poffenberger said.

"While the mandate is at the lowest end, that echoes up the whole pay scale," Poffenberger said.

Poffenberger said $5.15 is not a livable wage, but that the place to discuss raising it is in Washington, D.C., not Annapolis.

Meanwhile, he said that state and local wage-based incentive strategies can help raise wages.

Looking at the numbers

Nationally, the minimum wage in states varies from well below $5.15 to well above it.

As of the beginning of the year, 24 states, including Maryland, were using the $5.15 federal minimum wage as the state minimum wage, while six states have no state law designating a minimum wage, according to the U.S. Department of Labor.

In two states, the minimum wage is lower than the national wage - $2.65 in Kansas and $2.80 to $4.25 in Ohio.

The other 18 states and Washington D.C., have a rate higher than the federal minimum wage, including five states with a minimum wage higher than $7 - $7.15 in Alaska, $7.25 in Vermont, $7.40 in Connecticut, $7.50 in Oregon and $7.63 in Washington state.

The Herald-Mail Articles