Rising cost of business; minimum wage increases July 1

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By Cathy Barnes

With the challenging economy on everyone’s mind, an increase in the minimum wage may feel like a life preserver for some.

The state minimum wage is set to increase 70 cents from $6.55 an hour to $7.25 beginning today.

Kentucky Labor Secretary J.R. Gray says the state rate increase takes effect earlier than a federal minimum wage increase of the same amount set for July 24. Gray called the increase significant for many Kentucky families struggling amid the ailing economy.

The minimum wage rate for tipped employees, including waiters and waitresses, will remain at $2.13 per hour.

Locally, business owners will be affected in different ways by the increase.

According to Roger Hodge, human resources manager at Country Mart, employees and owners will not be effected by this wage increase because the employees are already being paid above the minimum wage. Starting in January of this year, Country Mart employees began receiving $7.25 an hour. Of their 76 employees there are only seven who are being paid minimum wage and most of them are high school students.

“The rise in the minimum wage rate really doesn’t make any difference to us,” Hodge said.

Cathy Wheeler, owner of the Subway also raised her employees wages in advance because she felt as though the beginning of the summer busy season was a good time to do it.

“About six weeks ago I went ahead and raised their minimum wage because I knew it was coming,” Wheeler said. “I’ve been fortunate to not have to make price changes over that past 5 and 1/2 years, but recently, I had to make price changes because of cost of food and the wage increase.”

Although she has already raised wages, she expects the rise to be a challenge in the future.

“Anytime you have an across the board wage increase it can make a huge impact depending on your sales. We have all these restaurants open but no new industry to help  support those restaurants. A mandatory wage increase when the the county isn’t growing, certainly affects the bottom line,” Wheeler said.

Wheeler anticipates further problems as the year draws to a close.

“It will definitely make a difference in the winter months when weather dictates everything. In bad winters we don’t have as much business but the cost of labor and utilities stays the same,” Wheeler said. “Come winter, I always work on the same rule of thumb. I can control two things: food cost and labor. If business is not there I have to make sure I don’t overstock to cut back on prices or cut a few hours.”

Even the Taylorsville McDonald’s expects to raise their prices on food at some point and possibly cut back on workers’ hours. But once again, most full-time daytime workers were already making at or above the new minimum wage. It is only the 14-, 15-, and 16-year-olds who work primarily in the evening that will be seeing a wage increase.

At the Settlers Trace Grocery Deli and Baithouse there are five out of 11 workers on minimum wage. Owner Steve Killian said that only the high school students who work there were making minimum wage, but that generally, when a wage increase occurs, anyone that was making more than that see it as a chance for a raise as well.

Since Killian took over the business in 2003 he has seen the minimum wage go up 38 percent.

“I see no option but to either limit the hours or increase prices. Every time you turn around, there’s another tax on small businesses. No doubt it will hurt the consumer with higher prices and the worker, who will get fewer hours,” Killian said. 

At the newly opened Snappy Tomato there are 12 drivers and 30 employees total. Bret Witte, director of operations and development, said that drivers are the only Snappy Tomato employees that make minimum wage, but that drivers also receive tips and commission ($1.25 per delivery to cover gas and wear/tear on vehicles).

“Yes, it (the wage increase) is going to impact us, but we don’t want to compromise our service. Wage and labor cost are not an issue right now,” Witte said

Kevin Griesser, a full time realtor with Elk Creek Realty, has taken on a part-time job as pizza delivery driver for Snappy Tomato. The extra income from Snappy Tomato is helping to supplement his family’s income during the housing-market slowdown.

Griesser’s view of the minimum wage hike is positive but he isn’t fooled by it.

“I don’t think it’s going to make or break someone’s financial situation,” Griesser said.

Currently he is making $6.55 plus a $1.25 delivery commission and tips. On a busy shift he averages between $8 and $10 an hour.

Griesser equates the higher wage to about a tank of gas.

“It wont be a wealth-builder for anyone but it wont hurt,” Griesser said. “I’m not going to turn it down.”

Although no local businesses expect to let employees go because of this increase, the best estimates from studies since the early 1990s suggest that the 11 percent minimum wage increase will lead to the loss of an additional 300,000 jobs among teens and young adults.