President Barack Obama urged Congress to raise the federal minimum wage to $10.10 an hour, but many small businesses fear the collateral damage associated with the forced pay raise may be too much to handle.
A small business owner in Michigan told Mlive.com Thursday that the potential increase could run her out of business.
“It could kill me as an employer,” said Rose, co-owner of Napoleon Cafe and the Hard Knock Grill with husband, Steve Rose in Jackson, Mich.
Currently, the federal mandated minimum wage is $7.25 an hour, but recent bills in both the House and the Senate have proposed to raise it to over $9 an hour.
In Michigan, were the Roses live, the minimum wage is $7.40. But a Democratic gubernatorial candidate, former 7th District U.S. Rep. Mark Schauer, supports a three-year plan to raise the minimum wage to $9.25.
The Roses and many other small business owners are nervous about the ripple effects caused by the hike.
“If you’re paying a dishwasher $10 an hour, then cooks and other staff, who might have a higher skill set, are going to expect a similar increase,” Hard Knock Grill chef and kitchen manager Daniel Pratt told Mlive.com. “We might have four or five (kitchen) people working at a time, plus myself. A $3 increase [per hour] a person would be a drastic, drastic change.”
John Burtka, owner of Grand River Marketplace and Cherry Creek Winery in Brooklyn, Mich., is concerned about the restaurant business as a whole if minimum wages increase.
“I think the waitstaff would probably still cover, but it would be hard for restaurants to raise wages for everybody,” Burtka told Mlive.com. “Profit margins are so tight, it would be very difficult to absorb that cost. Ultimately, prices would have to be raised.”
Not all people think the increase in minimum wages would be catastrophic.
Yannet Lathrop of the Michigan League for Public Policy told Mlive.com that higher wages would not only benefit employees making lower wages but the economy as a whole.
“A lot of these workers are having to turn to public assistance just to make ends meet,” Lathrop told Mlive.com. “The total spent on public assistance [in 2011] was about $151 million just in Michigan.”
Lathrop said she thinks higher wages would not only put more money in workers’ pockets to spend, but would also lower the amount of public assistance given out by the government, therefore saving taxpayers money.
Michael Rogers, the Small Businesses Association of Michigan vice president of communications, told Mlive.com he is scared that an increase in the minimum wage would decrease the amount of lower-wage jobs and the hours available.
“Businesses are going to look to eliminate the lower-wage jobs and go automated wherever they can,” Rogers told Mlive.com. “Now, that’s not going to apply to every job, for example maybe a waiter, but even now you’re seeing more restaurants pushing customers to order online so they can reduce their counter staff.”
Rogers went on to add that higher minimum wages could make it harder for young people looking to enter the workforce.
“At a higher rate, I think less [businesses] would be willing to take a risk and will only look to hire someone that is already experienced,” said Rogers.
The Roses along with many other small business owners told Mlive.com that they wished they had the means to pay their employees higher wages.
“We’d love to pay everybody $12 to $14 an hour,” said Steve Rose. “The reality is we can’t.”