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Minimum wage goes up, adds to costs



Published: Thu, January 1, 2009 @ 12:10 a.m.

The state’s minimum wage increases to $7.30 an hour.

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Two local business owners say they plan to keep their prices the same even though the state’s minimum wage is increasing today.

Local grocer Henry Nemenz said he expects to avoid price increases by having workers be more productive as the minimum wage is increased from $7 to $7.30 an hour.

In some cases, workers’ hours will be reduced, but mostly, workers at Nemenz’s IGA and Save-A-Lot stores will be asked to accomplish more, he said.

The annual wage increase is easier to handle this year because store revenues are up, perhaps because people are eating out less often, Nemenz said.

Jim Paxos, owner of the Mocha House in Boardman, said he will just have to deal with the increased costs.

“It’s just something we have to cope with,” he said.

Business owners are growing used to wages going up automatically each year since Ohio voters approved a constitutional amendment in 2006. The minimum wage is increased each year to cover inflation.

This year’s increase amounts to 4.3 percent. Restaurant servers and others who make tips will see their base pay go from $3.50 an hour to $3.65.

Proponents of the state increase say entry-level workers need the extra money more than ever as the nation struggles through a recession.

“It’s an effective anti-poverty policy, particularly at a time like this,” said Susan Helper, a professor of economics at Case Western Reserve University in Cleveland.

“When you give money to low-wage people, they basically spend it all, whereas the problem with giving money to rich people is that they tend to save some of it, so it doesn’t cycle through the economy.”

The state minimums apply to businesses that gross more than $255,000 in 2008 or $267,000 in 2009. The federal minimum for smaller businesses and for 14- and 15-year-olds goes from $6.55 to $7.25 an hour in July.

Roger Geiger, executive director of the Ohio chapter of the National Federation of Independent Business, said the timing of the increase is bad for small businesses.

“When businesses are struggling for their very survival and they desperately want to keep jobs, this automatic adjustment in the minimum wage couldn’t have come at a worse time,” Geiger said. “Now is not the time to be adding burdens to the cost of doing business in Ohio.”

The federation, which represents more than 25,000 independent, family-owned and -operated small businesses in Ohio, campaigned against the minimum-wage amendment.

Some small business owners facing higher payroll costs likely will cut jobs, Geiger said.

“When you’re in a recession, and close to the bottom of a recession, you hate to see costs increase,” said Ned Hill, interim dean of Cleveland State University’s College of Urban Affairs. “For retailers and local services, this clearly is another disincentive to employ somebody.

“Those people who earn $7 an hour and have a job, they win. Someone who doesn’t have a job loses.”

Businesses that pay better than minimum wage often increase pay proportionally when the minimum rises.

Dave’s Supermarket, a 13-store chain based in Cleveland, doesn’t hire employees at minimum wage. But the chain probably will increase pay for many of its 1,500 employees, owner Burt Saltzman said.

Employee Mary Lou Lopez said she and other members of United Food and Commercial Workers Union Local 880 would welcome any increase.


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