Minimum Wage Increases In 21 States Will Have Impact On Restaurants
By Christine Kern, contributing writer
Will wage hike have a detrimental effect on restaurant owners?
By Christine Kern, contributing writer
The minimum wage is set to get a boost in 21 states during 2015, in large part due to the national movement to boost the earnings of low-paid workers, according to CNBC News.
The increases will boost hourly wages by up to $1 in some states, to an average of $8 and a high wage of $9.15, according to the Economic Policy Institute, and will affect up to 2.4 million workers. The federal hourly minimum wage is $7.25.
The hikes will take place at different paces across the 21 states.According to the Nation’s Restaurant News, some states, including Maryland, New York and West Virginia, will see two-step increases in 2015.
Other places, including Alaska, Delaware, Minnesota and Washington, D.C. have increases scheduled for later in 2015, not on Jan. 1. And, for many, the wage hike planned for next year is a phased-in increase that will continue climbing in 2016 or later.
The wage hikes have some restaurant owners concerned about covering costs.According to the Louisville Business First, Louisville-based Tumbleweed Restaurants Inc. CFO Buddy Mattingly said that although most of the Tex Mex chain's 500 Louisville employees make more than minimum wage, compliance with the $9 minimum wage will cost them $275,000 over the next three years.
And while the initial hick to $7.75 in 205 will not affect jobs and menu prices, the company will have to re-evaluate the impact of the minimum wage increase in 2016 and 2017, he said.
"There is no question that when we look out three years, someone is going to have to cover $275,000," Mattingly said. "That cannot just be absorbed in our company, so there would be some impact on pricing."
But while many restaurant owners worry about how they will cover the added expenses driven by the wage hikes, not all are opposed to the change.
One restaurant owner has written in favor of the minimum wage hike. In a blog post, Chris Sommers , co-founder of Pi Pizzerias and Gringo Mexican Restaurant, wrote, “As a restaurant owner operating in four states and looking to expand, I’m happy to see the minimum wage going up in 21 states to kick off the new year. I‘d like to see the federal minimum wage increase as well to benefit business and our economy nationwide.”
And Sommers stands behind his words. He and his partner raised the minimum wage in their restaurants to $10.10 last spring, without raising prices, and he says it has been a success.
In fact, Sommers says, the benefits outweigh the cons. “We’ve seen that after implementing a $10.10 minimum wage our teams are performing better, our labor cost is under budget, our sales are great and we’re expanding.”