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Federal minimum wage increases raise concern Some say boost could lead to job losses, higher prices, while others say impact will be minimal |
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Friday, 10 July 2009 11:48 |
by Michelle Saxton
Daily Mail Capitol Reporter
CHARLESTON, W.Va.--While some West Virginia food service and business officials say the industry is prepared for this month's minimum wage increase, others predict a snowball inflationary effect that could lead to higher prices and job losses.
"They've known it's coming since 2007 and I think everyone's pretty much ready for it," said West Virginia Hospitality & Travel Association Executive Director Carol Fulks. "To keep good people, you have to pay good wages and benefits."
The federal minimum wage increase of $6.55 an hour to $7.25 an hour starts July 24 and is expected to affect about 26,000 West Virginians. Many of those employees work in food preparation, leisure and hospitality services.
West Virginia's hospitality and travel industry already pays more than minimum wage to most workers, except for some entry-level workers, students or training-wage employees, Fulks said.
"West Virginia's unemployment rate has been so low the last couple of years that in order to be competitive in this job market, many businesses that traditionally have paid minimum wage were already paying higher than minimum wage to attract and keep employees," said M.E. Gamble, director of the West Virginia Small Business Development Center, which is supported by the state development office.
Because of that, some hotel, motel and restaurant managers have said the impact of increasing the minimum wage is likely to be minimal, West Virginia Chamber of Commerce President Steve Roberts said.
But some restaurant owners disagree.
Dewey Guida, owner of Dee Jay's BBQ Ribs and Grille in Weirton, said while the wage hike will have no direct labor effect on his business (he already pays his staff $7.25 or more including tips), he may get hit with higher costs from suppliers who raise their prices after paying higher wages to their workers.
"It's a domino effect," said Guida, who also serves as a board member for the National Restaurant Association.
It may take months for restaurants to adjust to the effects of the wage increase, but one result might be layoffs by the end of the year nationally and in West Virginia, Guida said.
"It's time they moved them up," said Burke, who also serves as a vice president for Better Foods Inc., which operates several restaurants in the Charleston area. "It will be good for the economy and the people, gives them more to spend, helps them get through their daily life."
Burke said he believes most restaurant businesses would evaluate workers already earning above the minimum wage for a raise as well.
West Virginia AFL-CIO Secretary-Treasurer Larry Matheney is pleased with the wage increase.
"If there's a segment of our society that needs help beyond the jobless, it's those literally trapped in poverty by low wages," Matheney said. "They must be thrilled to think about the possibility of maybe being able to afford a food item or the possibility of being able to ride the bus or find some form of transportation to get them to work that they currently can't afford."
While Guida agreed workers could benefit from the minimum wage increase, he said the timing is bad.
"We are in serious terrible economic times when you're pushing 10 percent unemployment," Guida said. "This will further hurt the economy rather than to keep it stable."
Nationally, the restaurant industry is one of the few that have grown annually, Guida said, with more than 13 million workers and close to a million establishments.
"Yet we're going to be one of the industries that's going to be hit the hardest," Guida said.
Burke said while figuring out how to make up any costs from the wage increase is a concern, restaurants will monitor food prices and try to hold their own prices as long as they can.
"I don't feel there'll be layoffs in the restaurant industry because of that," Burke said of the minimum wage increase. "As long as people keep eating, we'll be fine."
Contact writer Michelle Saxton at
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or 304-348-4843.
"You raise your prices or you eliminate people," Guida said. "It's not hard math.
"It's an inflationary move that one way or another we're all going to pay for," he added.
Restaurants will have to try to absorb as much as they can and may eventually have to raise prices, but the minimum wage increase is good for workers, said Ray Burke, president of the state Hospitality & Travel Association's Food Service Division.
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