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Some business owners say minimum wage hike forcing cuts



Published: Fri, January 20, 2012 @ 12:01 a.m.

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Minimum-wage increases have taken their toll on some small businesses in Ohio such as Belleria in Cornersburg. Owner Leanne Douglass said she had to close her full-service restaurant because of increasing labor costs.

By Karl Henkel

khenkel@vindy.com

YOUNGSTOWN

Ohio’s new minimum wage, which climbed to $7.70 on Jan. 1, doesn’t appear to be an earth-shattering increase.

On the surface, it’s 30 cents more per hour than in 2010.

That’s an extra $12 a week for a full-time minimum-wage worker, an extra $48 a month and an additional $624 a year, before taxes.

But what is good for the goose is not necessarily good for the gander.

Though about 291,000 Ohio workers will capitalize directly on the wage increase, according to the Economic Policy Institute, thousands of businesses now are forced to pay higher wages.

One of those businesses is the Cornersburg Belleria on Meridian Road in Youngstown.

“I had a full-service restaurant and went down to carry-out delivery,” said Leanne Douglass, owner. “People still don’t understand why. They think anyone who owns a business is making tons of money. They don’t understand our costs at all.”

The Cornersburg Belleria, which had a spacious dining area with bar, was forced to close that section of its location at the end of 2011.

The restaurant is now down to about 10 employees, 20 fewer than its peak last year and well below its all-time high of 45.

“We had a lot of older women helping with the house payments,” said Mark Douglass, co-owner. “It hurt.”

A work-force reduction is nothing new for the Douglasses, owners of the Belleria since 2001.

As part of a constitutional amendment approved by voters in 2006, the minimum wage increases each year at the rate of inflation.

“This is the biggest economic downturn since the Great Depression,” said Mark Douglass. “The timing was awful.”

The minimum wage has jumped five of the past six years.

In 2007, it skyrocketed from $5.15 per hour to $6.85 per hour.

The new 2012 minimum-wage rate of $7.70 applies to workers 16 and older who don’t get tips. The wage for tipped employees is up 15 cents to $3.85.

Their total pay cannot be less than $7.70 hourly.

Employers that gross more than $283,000 annually must comply with the state’s new minimum-wage standards; all others must pay employees a minimum of $7.25 per hour.

Many point to minimum-wage increases as a way to help low-income individuals and families keep up with the cost of living.

According to EPI, Ohio’s minimum-wage increase will result in $76.5 million in increased gross domestic product.

The EPI report says the new minimum-wage standard is expected to create 665 full-time jobs. Those jobs, however, likely will come from additional hours for part-time workers and not actual “new” jobs.

Tod Porter, economics chairman at Youngstown State University, said the minimum-wage debate is, for the most part, overinflated.

“You have a controversial issue creating a lot of interest, but the effects on the ground are pretty modest,” he said.

Porter said minimum-wage increases often have minimal positive effects on poverty rates and minimal negative impacts on employment levels.

“The standard economic theory suggests that an increase in the minimum wage should result in a decrease in the number of hours employed,” Porter said. “A 10 percent increase in minimum wage would result in 1 percent decrease in teenage employment.”

About 28 percent of Ohio workers affected by the minimum-wage increase are under 20, according to Policy Matters Ohio.

About 25 percent of the workers formerly employed at the Cornersburg Belleria were under 20.

The Mahoning Valley has another angle working against it: its proximity to Pennsylvania.

In 2009, Pennsylvania’s minimum wage was 60 cents higher than the wage in Ohio. The Buckeye State minimum wage is now 45 cents higher than that of the Keystone State, which at $7.25 per hour matches the current federal minimum wage.

“I would never open another business in Ohio,” Leanne Douglass said.

Even a Pennsylvania businessman can’t believe the rate at which Ohio’s minimum wage has increased.

“It’s counterproductive,” said Lou Desimone of Cedar Manor Personal Home Care in New Castle, Pa. “Let the market carry itself.”

Porter said, however, that if minimum wage properly followed inflation, the current federal minimum wage should be more than $8 per hour.

There was a decades-long stretch beginning in 1997 when the federal government did not increase the minimum wage, Porter said.

“Minimum wage is not high by historical standards,” he added.


Comments

1VINDYAK(1799 comments)posted 2 years, 11 months ago

At $12.00 per employee per week times 20 employees = $240.00 per week times 52 weeks = $12,480 per year increase in wages.

Or, the other way to look at it...20 employees @$7.70 per hr times 40 hrs per week = $6,160.00 each week... times 52 weeks = $320,320 total wages for the year!

This does not include state and federal taxes, health insurance for management, nor payments to accountants or other services rendered during the year, such as mowing, snow removal and equipment repairs. Then, you have your utility bills and mortgage payments.

If you think that is still not enough, wait till you see the bill for food and supplies...its even more!

Now, would you like to be a small business owner today?

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2dck516(25 comments)posted 2 years, 11 months ago

lady, you're cheap...plain and simple!

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3block50(128 comments)posted 2 years, 11 months ago

Evil minimum wage workers! Bring in Bain Capital. Those millionaires will know how make it better. Bring in some Chinese child labor at 50 cents/day. Import your pizza. Most of American business has found a way around paying a living wage. you can, too.

Hey, Vindy, nice hatchet job on the lowest paid workers on the scale. With Youngstown being such a wealthy community, I'm sure no one was hurt by this hit piece. Did you hire the Heritage Foundation for this wonderful article?

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4UnionForever(1470 comments)posted 2 years, 11 months ago

Her business was failing long before any minimum wage increase this year. Maybe she needed to call Chef Robert irvine & "Restaurant Impossible" for help.

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5glbtactivist(261 comments)posted 2 years, 11 months ago

if you can not pay minimum, or slave, wages then you should not be in business. $15,000 a year is not any where near enough to live on. You are forcing the rest of americans to provide your workers with food stamps, health care and they probably don't pay taxes due to your low pay rate. You are a mooch on society.

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6republicanRick(1252 comments)posted 2 years, 11 months ago

Teenage unemployment stands at record levels. Minimum wage stands at record levels.

Government control costs kids jobs and a learning experience.

Government control is the problem.

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7bright2010(2 comments)posted 2 years, 11 months ago

My intent was not to complain about minimum wage but to explain how its only in Ohio that this can go up every year and will continue to go up year after year only increasing costs that the consumer pays. And how people on fixed incomes are not getting raises.

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8Attis(922 comments)posted 2 years, 11 months ago

The minimum wage is a poverty wage and needs to be raised nationwide to a living wage. It should be illegal for anyone in America to work full time and still be officially poor.

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9AtownParent(562 comments)posted 2 years, 11 months ago

All the other Belleria's close to this one offer a dining area but know how to do it properly for their business. This woman had too much staff for her location. She did not know how to properly manage her business, it wasn't the .30 increase. That dining room was gone long before the end of 2011, they tried to make it into a banquet hall and when that didn't work they closed it down. Also, the food is sub par with the other Belleria's. If you are going to try and compete with Inner Circle Canfield with the whole bar/pizza/food place, you need to have just as good or better food.

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10card64inmyrtle(26 comments)posted 2 years, 11 months ago

Oh boohoo does that mean that paying a living wage to your employees means you will have to sell your vacation home in the Bahamas......so long.....why do all these business people think they should be making a million dollars?

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11Superstar7(122 comments)posted 2 years, 11 months ago

As a small, multi-location business owner:
Every phone call we answer starts with a customer saying: "how much is?"
Everyone wants things CHEAP, CHEAP, CHEAP, yet many responses here are from uneducated people that fail to comprehend-
if you demand things cheap, that disallows our ability to offer raises.
Walmart forces their employees onto Medicaid to subsidize their low wages-what you believe to be low prices are really subsidized by YOUR higher taxes to cover Walmart's low wages. Belleria produces a great product. If you don't appreciate it, there are MANY alternatives. Don't attack the messenger-listen to the message. Raises in minimum wage, real estate taxes and school levies have made this area noncompetitive. If you can't live on minimum wage, open your own business, get another job or a second job or reduce your expenses like WE have for 15 years!

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12whitesabbath(738 comments)posted 2 years, 11 months ago

superstar aparently they have to ask says something in itself. all spelling Nazi's may now ad lib.

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13paulparks(235 comments)posted 2 years, 11 months ago

Let's take the lady at her word. It is very difficult to run a small business and her Belleria has great food.

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14mjusino(15 comments)posted 2 years, 11 months ago

Right on, Attis. Let all those who are crying over this increase find a place to live, a car to get to work, insurance to cover themselves, food to sustain themselves, and maintain electric, heat and water bills on $7.70 an hour. Are you kidding?! We are about 20 years behind, thanks to the blood-sucking greed and profit-makes-the-world-go-round pigs.

And as for you, Little Leanne, close up and buy yourself a laundromat! -disgusted

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15peacelover(791 comments)posted 2 years, 11 months ago

I agree with youngstown615. Two of my sons have worked in the fast food and food service field, and rarely if ever does anyone work 40 hrs. a week at those places, more like 20 hours a week if you're lucky, plus you are exactly right, they get sent home early once it slows down. Those are definitely not jobs that will supply a living wage, they are more like jobs for students or second jobs for someone trying to support a family.

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16VINDYAK(1799 comments)posted 2 years, 11 months ago

Amen, Superstar, Amen!

Those who comdemn business owners have no clue, yet they complain the most.

They complain when you ask them for a receipt when they attempt to bring in a return.

They open and eat food while they are shopping and leave the wrappers on the floor.

They talk loudly on their cell phones while in your store and even throw in some swearing to impress everyone.

Their children scream and run throughout your store, tossing items from aisle to aisle.

They load their pockets with unpaid for items and purchase an item for a dollar with their food stamp card.

They steal items out of shrink wrapped packaging, leaving the empty package hanging on the rack.

They return to your store time and again, until you confront them, then they scream holy murder, threaten to sue you and pretend to be calling their lawyer. When you speed dial the police, they leave the store and are gone by the time the police arrive.

The worst time of your day is playing your security video back to see who did what when you were too busy to watch during the day.

Welcome to America, Small Business Owners. You are not appreciated, you are taken advantage of and yet you still continue to try and earn a living and supply your community with goods and services.

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17hurdler(1 comment)posted 2 years, 11 months ago

I thought there was some fishy about the tone of this article as soon as I saw stats from the Economic Policy Institute. I hadn't heard of them before, but a quick search on wikipedia reveals the source of the smell...turns out the
EPI's President is Lawrence Mishel, a long-time member of Democratic Socialists of America. Great...let's follow their agenda!

Then, the writer gets another point of view from a professor who probably hasn't run a real business in his entire life.

Folks, if you want the government shoving more laws on business, and trying to manipulate the free market, there are plenty of failing countries to move to.

By focusing the "business" point of view on one employer, the Vindy allowed the conversation to be about that one business and failed to engage their readers in a balanced report on the real issues facing ALL employers in the Valley.

Continued bias to push an agenda will not solve anything, and if we're going to help rebuild this economy, one good first step is rebuild the integrity of our media.

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18Bigben(1996 comments)posted 2 years, 11 months ago

What no one has mentioned thus far is the continual nose dive of the dollar. Just look at your exchange rates against currencies over seas.I remember when in the early 1990s an American could live like a king in Jamaica for example. The dollar may still be favorable there but I would bet it has gone downhill.

As our jobs continue to go overseas and even our agriculture to a greater degree these days is imported more and more what do we expect?I mean do we need 3 different countries to make apple juice and one of them is as far away as China? The globalist free trade agreements and loss of protections from greedy corporations has hurt us all.

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19anothermike(213 comments)posted 2 years, 11 months ago

News flash for all you "business people" : (I use the term loosely): The minimum wage is set by law because some of you would pay less if it didn't exist. Who the hell are you that you are entitled to have someone do all of the work for you and not get compensated at all for it? Secondly, if you are running that close that a few cents increase is a problem, you aren't now and never were making a profit and you don't need to be a CPA to know that.....even though one might have helped you in the first place....

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20LtMacGowan(669 comments)posted 2 years, 11 months ago

oh boohoo you're breaking my heart. Having to pay your employees 30 cents more.

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21jasoninohio(119 comments)posted 2 years, 11 months ago

Maybe just charge a little more the food. That's what you normally do in a succuessful business, raise prices when costs go up.

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22republicanRick(1252 comments)posted 2 years, 11 months ago

Maybe people supporting raise in minimun wage should go to their union run restaurant -- oh that's right, there are NONE because the high employee cost runs all customers away.

It's amazing how the losers in society want business, big and small, to pay for everything for them.

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23JoeFromHubbard(1139 comments)posted 2 years, 11 months ago

Excellent post #30, Thomas53.

The legislated minimum wage is another example of government interference with what should be private business.
The story about the demise of a local restaurant is a prime example of the unintended consequences of such legislation.

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24AtownParent(562 comments)posted 2 years, 11 months ago

Toycannon, you are right, it was not meant to raise a family on, however, it seems to be the prevailing wage around this area when you find yourself out of work and looking for a job.

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25joebag09(267 comments)posted 2 years, 11 months ago

This particular Belleria's dining area has been closed for months! It's abosolute BS to blame the wage change. I have been to other Bellerias and business seems fine. Bottom line, this area claims to be doing better, job wise, but so many jobs are minimum wage. Who lives on minimum wage? These were primarily jobs for teens and college students. Now folks trying to exist are forced to take on these jobs because that is whats out there.

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26GnomeMad(22 comments)posted 2 years, 11 months ago

I can understand the plight of small business owners (I have a *very* small business with three employees -- me, myself and I) and know very well that costs are very important and I do my best to keep them as low as possible. But I also know that more important than costs are the quality of your product or service, the ability to market your business well, and how well you provide customer service.

There are lots of pizza shops in this area that do very well (at least from outside appearances). If they're able to do well in this economy, what's the matter with this particular shop? I've never eaten there, so I can't speak to the quality of food or service, the "ambience" or whether their pricing is competitive, but I highly doubt it's the minimum wage bringing them down. Sure, it can be a contributing factor, but if they're running a business based solely on containing costs, they probably shouldn't be running a business.

Just my two cents. Now back to work for me -- I have a business to run. :-)

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27dcheck(9 comments)posted 2 years, 11 months ago

Many of you are missing the point. It's easy to criticize a small business or any employer while sitting behind a keyboard. And the hourly wage is not near the final cost to employ and individual. All other costs related go up exponentially. Here's a small example of the real world:

We generally hire summer help. The amount we hire depends on many things. Usually High School or College kids off school. We had a teenage girl working for us a couple summers ago. She came to me one day (literally) crying because she had just received a $300 cell phone bill one month. We've had many high school kids apply for work that can't read a tape measure. Couldn't add ¼ plus ½. I'm not kidding. Another individual would routinely not show up for work, or leave complaining of a belly ache. After several warnings we let him go. After letting them go, the (single) parent stopped in and pleaded with me to keep them, and then reamed me for letting them go when I refused to give them a 5th or 6th chance. I could give you countless examples of bad experiences. You think I'm exaggerating? Nope. This is the mentality of many minimum wage young people. $7.70 an hour doesn't sound like much. It isn't if the individual EARNS it. You think dealing with minimum wage employees is easy? Open your own business and try it. It's a whole different world when it's your livelihood or life savings at risk.

Minimum wage entry level jobs were never intended to feed a family. Most of these jobs are targeted to teenagers. These are teenagers that lately seem to have no economic common sense. $100+ month cell phone bills. Cars with electronics in them that many high wage earners could not afford. Just when I think I've seen it all, I get a new lesson. You think it's rare? It's not. We've hired summer help for years. It's very rare to find an individual with a good work ethic these days. They're out there. We've had several over the past few years. Many worked several summers earning higher rates. A couple have stayed on after finishing school and are now earning that “living wage”. But it's nothing like it used to be.

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28Owlguin(49 comments)posted 2 years, 11 months ago

I love the pizza and have been in the place, and can't imagine how she could have had 45 employees at any point in time.Thirty possibly, and certainly not all full time. Now what has happened is she's taken probably her second highest cost (the building) and made it non revenue producing. It sounds like the problem here is revenue, not cost.

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29RFederer(116 comments)posted 2 years, 11 months ago

The same people who advocate for a higher minimum wage are the same people who won't pay more than $5 for a plate of spaghetti.

Businesses will think twice about relocating to Ohio if the cost of doing business continues to increase faster than the cost of living.

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30rocky14(735 comments)posted 2 years, 11 months ago

How dare people for wanting seven dollars an hour!!

RF

You can take your business to one of those Southern states that always have the most poverty.

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31drpautot(70 comments)posted 2 years, 11 months ago

It never ceases to amaze me just how bad the rhetoric on this site gets. You try being a student, trying to make ends meet off the student loans, (which by the way were cut to a maximum of 5550 for Pell.) work 2 jobs and afford the books to go to any college? I really cannot wait for a bloody revolution, that will kill all the rich, old coal, oil, and money men that run this country into the ground on a regular basis. What we need is a good old fashioned plague.

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32republicanRick(1252 comments)posted 2 years, 11 months ago

HaHa drpauto -- you are amazed at the bad rhetoric on this site and then you wish ALL OLD MEN GET THE PLAGUE AND DIE!!!

Isn't that a hate crime?

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33GnomeMad(22 comments)posted 2 years, 11 months ago

How can the cost of doing business in Ohio be rising faster than the cost of living? Don't blame the minimum wage, because the minimum wage is directly tied to the cost of living. Feel free to blame taxes. Or blame rising transportation costs -- how much more is a gallon of gas today than a year ago? Did you ever stop to think that *employees* are *also* having to deal with rising costs?

I work for myself and my costs of doing business have shot up year after year and it's most definitely *not* because of rising minimum wages. It's because lumber costs more. Advertising costs more. Gas costs more. Utilities cost more. Office supplies, tools, steel-toed boots, you name it -- everything costs more. I can't think of a single thing that costs less.

Businesses may be feeling the pain of higher costs, but so are their employees. You want someone to show up for work when they can't afford to put gas in their car? Assuming they can afford to insure and maintain a car? Let alone own a car?

And maybe people don't want to pay $5.00 for a plate of spaghetti because they could make that same plate at home for $0.50 (and probably better). Or maybe it's because their employer is too cheap to pay them a fair wage for an honest day's work, so they can't afford to take the family out and spend $5.00/plate (plus $1.50 for each soft drink, plus tax and tip and the gas to get there -- and that's assuming they didn't order a salad).

I'm sorry, but sometimes the "logic" used here just amazes me.

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34anothermike(213 comments)posted 2 years, 11 months ago

It does NOT take a Harvard grad to figure out that your minimum wage (and no fringes) employees are not your main problem unless you have too many of them. If your food costs and fixed costs are in line (ask your accountant), then you simply aren't doing enough "business" . McDonalds and other franchises give you the same product all over the country and pay bigger wages in some areas than others....they don't go broke....

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35danikytn(248 comments)posted 2 years, 11 months ago

I think their prices, along with their insanely greasy pizza have more to do with the failure than a few dimes does...

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36Freeatlast(1991 comments)posted 2 years, 11 months ago

MMMMM I thought it was the bad food that I got there and never went back
There are to many good pizzas in this area and the stores are clean

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37walter_sobchak(1982 comments)posted 2 years, 11 months ago

I'm sure most of the posters here have never started a business, hired employees and had to meet a payroll. But, the personal attacks on someone because of their appearance is disgusting.

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38scarletandgray(3 comments)posted 2 years, 11 months ago

Some of your comments are so off base.
I don'y know these people, but I'm sure they have a large amount of money invested in this business and nothing makes you happier than the possibility of them failing. I moved to Las Vegas two years ago and now I know why.

Only $.30, times every hour worked or in many cases every hour punched in screwing off and avoiding anything that resembles work. You should be ashamed of yourselves, these people chose to invest in you town and you respond with contempt.

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39JoeFromHubbard(1139 comments)posted 2 years, 11 months ago

From a previous post > > > how bad the rhetoric on this site gets. You try being a student, --- I really cannot wait for a bloody revolution, that will kill all the rich, old coal, oil, and money men - - - What we need is a good old fashioned plague. < < <

This sounds like a college kid who needs to spend 3 or 4 years in the military to gain some maturity.

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40rocky14(735 comments)posted 2 years, 11 months ago

It looks like she ate all of the profits.

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41ts1227(137 comments)posted 2 years, 11 months ago

Around here, you have the problem of no one wanting to pay true market value because of a mix of the economy in the tank and people being insanely cheap in the valley. If you leave this area you see pretty fast that the prices around here are low.

Then you run into the problem that supplies come from other places where vendors actually charge what it's worth, but you can't pass those prices along in this area because the economy is shot and no one will pay what it's worth. You'd be insane to open a business around here and expect to make money.

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42howardinyoungstown(591 comments)posted 2 years, 11 months ago

Just a thought, but maybe her business problems have something to do with their being at least 7 pizza restaurants within a quarter mile of her location. With that level of competition, you have to have above average food and customer service to stay open. I live about 3 miles from Cornersburg and I have to pass by another 10 pizza restaurants to get there.

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43pineapple1(14 comments)posted 2 years, 11 months ago

maybe she should have stopped eating all the profits!

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44GnomeMad(22 comments)posted 2 years, 11 months ago

I'd also point out that the headline reads SOME, not ALL business owners say the hike is forcing cuts. I'd imagine *most* if not all business owners would rather see the minimum wage rolled back to $5.35 or whatever it was (or eliminated altogether), but they've accepted it as an inevitable business expense and carry on.

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45Freeatlast(1991 comments)posted 2 years, 11 months ago

Watter @ I'm sure most of the posters here have never started a business,
Yes I have six to be exact and I have always paid more then minimum .
You sound like F&E Please some body take care of me . Her food was awful and that is why she is out of business . Almost all the businessman in Cornersburg stopped go there .

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46southsidedave(4860 comments)posted 2 years, 11 months ago

$7.70 is killing your business? The business was marginal to begin with. Best of luck!

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47anothermike(213 comments)posted 2 years, 11 months ago

The bottom line is simple: (no pun intended). Some people have no business in business. They start on a shoe string and have no clue of what business, small or smaller, involves. Former factory workers (Packard, etc.) thought they could "cash out" and start their own companies when they had no experience out "on the street". Even though everyone eats, selling food and making a living at it is easier said than done........

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48Jake(112 comments)posted 2 years, 11 months ago

The notion that government can set artificial floors and caps on prices without consequence is economic nonsense.

As we have learned over the last few decades in Ohio, Joe Sixpack knows nothing about economics, thinks every business is a bottomless pit of money, and feels people should be paid based on what they "need" or how long they have been alive. They vote accordingly, and the inevitable result is what we have seen in the Rust Belt - economic collapse.

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49keugene(21 comments)posted 2 years, 11 months ago

everything has gone up and it has gone up over the last 8 yrs.....oohh, who was in office then...i am trying to do my taxes and take a legal deduction for transportation workers.....only to find hundreds of "business deductions for both small and large business"

I know of two businesses that started in the last year, that the owners were yapping how much everything costs, but went out and leased luxury automobiles, bought fancy furniture for their house, etc......and the business isn't even established yet...

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50needakidney(2 comments)posted 2 years, 11 months ago

the only jobs left around here are minimum wage, so thank goodness the pay increase.

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51hmtoys(1 comment)posted 2 years, 10 months ago

Come on!! If you don't like minimum wage, go back to school. Tired of paying for healthy 20 year old people to sit @home and collect wellfare. Business is business they are there to make a profit not to go broke providing a living for everyone else. Why should a business pay for someone to sit around and do nothing that doesn't make any sence.

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52Opey4703(1 comment)posted 2 years, 8 months ago

HAHAHA - Here is a little fact for EVERYONE on this blog to take into consideration....
Minimum wage or not, cry me a river...They sold their previous location on for $900,000.00.

Yes...you read that right, NINE HUNDRED THOUSAND DOLLARS. ( Most of us will never see that in our lifetime, let alone on ONE property sale.)

And when they built their shiny, new Belleria, they paid around, $280,000.00....this partially due to the fact that they ripped off everyone involved in the building process ( mostly heresay, but the price is about right...)

Now, all this being said...WHERE oh WHERE did the rest of that at LEAST $500,000.00 go?

New home remodeling? Check. Vacations? Check. Shopping sprees? Check. You got it America...here's a great example of WHY so many people look at small business owners with dis-appreciation and judgment...because of people like this!

So, pardon me if I don't go cry a river, boo hoo "minimum wage" went up...With all that money, perhaps they shouldn't have been so SELFISH and foolish with their spending and perhaps they wouldn't have to "shut down" parts of their business because of the raise...what a crock of CRAP.

Oh, and one last thing...they are also making money off of the tenant they currently have occupying the space next to them...Income, income, income....And THEY'RE struggling? Hahah - This makes me laugh. Pay the wages to those who work for them and attempt to be honest individuals or else, shut down your business...your lame excuses are making most of us sick.

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