Businesses adjust to hike in minimum wage
MARIETTA – Ohio’s minimum wage rose 15 cents on Jan. 1, to $7.85 for non-tipped employees. It’s exactly a dollar higher than the minimum wage in 2007, the year after Ohioans voted for a constitutional amendment that mandates annual wage increases based on the rate of inflation.
The jump could spell bigger paychecks for Ohio’s low-wage workers, but as in years past, the sudden burden on payroll is a concern for both small and big businesses alike.
“Certainly it affects us. Right now, we aren’t making any changes. It’s part of doing business,” said Laurie Strahler, local McDonald’s franchise owner.
Now 99 of 241 employees at Strahler’s five locations are making the new minimum wage.
Still, Strahler is taking a wait-and-see approach before making any changes, including staffing cuts or price increases, at her five locations.
“We don’t want to instantly raise the prices because of this. We’ve known it’s been coming for a long time. We obviously plan for it,” she said.
The minimum wage increase also puts pressure on employers to boost the wages of those employees already earning more, said Burger King franchisee Matt Herridge, who owns 23 locations including the one in Marietta.
Though the company will not be raising the rates of pay for employees in their 16 West Virginia locations, they will be raising the wages of all of their Ohio employees, said Herridge.
“If we raise our entry level worker 15 cents, they are moving to the rate of someone who has been there longer. So we move them as well, to recognize that that person has more tenure or experience,” he explained.
An across the board 15-cent raise was also implemented at Marietta restaurant Bar-B-Cutie, said owner Shane Stotts.
“Just to kind of keep everything on a fair basis, we were able to do that,” he said.
Stotts said the change will affect approximately a dozen employees, split half and half between minimum wage and higher paid employees.
It is a change for which employees are grateful, said Barb-B-Cutie manager Tiffany McIntyre.
“I think everyone is really excited,” she said. “Now everyone is almost $8 an hour and that is crazy compared to what it used to be.”
Ohio wages have been on the rise in the past seven years. When the 2006 amendment went into effect, it ended 12 years of a stagnant $4.25 minimum wage. In fact, businesses that grossed less than $500,000 were subject to even lower minimum wage rates.
And now that Ohio’s minimum wage is tied into inflation, employers can expect the wage increases to continue.
Some businesses are hoping slightly higher price points will help offset some of the cost.
Ed Gossett, manager of White Oak Pharmacy in Vincent, said he will be looking at the prices of some of the items on the floor, but is wary of changing prices too much.
“You have to have a good price so the customer wants to come in and buy something, but eventually it starts to hurt your bottom line,” he said.
In December, local business Smitty’s Pizza announced price increases on its Facebook page that were partly a reflection of the higher wages they would soon have pay to more than 50 employees.
Smitty’s owner Juanita Lannigan could not be reached for comment Monday.
But increasing prices to compensate for higher wages is an unfortunate cycle, said Herridge.
“Unfortunately, the biggest challenge with minimum wage is we are forced then to consider price increases, which leads to inflation, which in turn leads to a raise in the rate of minimum wage,” he said.
And though Herridge has not yet noticed West Virginia employees forgoing their jobs to find better wages across state lines, that prospect is a concern.
West Virginia’s minimum wage, $7.25 an hour, has been in place since 2009.
“The bigger the disparity becomes, the more pressure it puts on West Virginia employers to match wages, especially on border towns like Parkersburg and Vienna,” said Herridge.