Federal, state proposals to raise minimum wage kindle uncertainty

Published: Tuesday, March 12, 2013 5:30 a.m.CDT
Caption
(Kyle Bursaw – kbursaw@shawmedia.com)
Maria Star-Lopez covers Oreos in chocolate Friday at the Confectionary in DeKalb.

Todd Hendrey hopes he doesn’t have to raise the price of candy at The Confectionary.

But with the recent proposals by Gov. Pat Quinn and President Barack Obama to raise the minimum wage nationally and statewide, Hendrey may need to make some adjustments to his business.

“With the economy the way it is, it’s going to be tough,” he said.

In his State of the Union address Feb. 12, Obama suggested increasing the federal minimum wage from $7.25 to $9 an hour. Quinn also proposed an increase in his State of the State address Feb. 6, in which Illinois’ minimum wage would go from $8.25 to $10 an hour.

If the minimum wage is increased, Hendrey said he and his wife, Betsy, hope to keep their business running as usual without making any major changes, such as reducing staff. They have locations at 149 N. Second St. in DeKalb and 235 W. State St. in Sycamore.

“As long as I can financially do it, I would keep people on,” he said. “People have to feed their families.”

DeKalb Chamber of Commerce executive director Matt Duffy said many businesses in the community could be negatively affected by the proposed new minimum wage laws.

“Anytime you make a change, people have to make adjustments,” he said.

Duffy said some of these adjustments for many businesses include staff reductions or fewer hours available to employees. Businesses must absorb the higher labor costs, which could indirectly affect employees if they can’t work as much, he said.

“The reality is it may help some individuals,” he said. “But it may hurt them as well.”

Duffy compared the situation to a pie, in that the money is not being pocketed by anyone, but rather the percentages of the pie shift from businesses to employees.

“It’s not necessarily solving a problem, but changing it,” he said.

Valerie Cranden said her business would be affected by an increase, but not as much as others.

Cranden and her husband, Joe, have owned and operated Ollie’s Frozen Custard at 2290 Oakland Drive in Sycamore since 2000. She said they’ve dealt with minimum wage increases in the past, but usually their loyal customers help them keep adjustments to a minimum.

“They like a premium product,” she said. “Without our customers, we wouldn’t be able to [support the pay raise].”

Regardless of whether or not the minimum wage increases, Cranden said it shouldn’t make a huge difference for Ollie’s.

“I know people are going to be hit hard with it,” she said. “Fortunately, it doesn’t hit us as hard.”

Carl Campbell, the economics chairman at Northern Illinois University, said economists are divided on whether minimum wage increases hurt or help the economy.

Some economists feel a higher minimum wage benefits the economy because employees have a greater take-home pay, giving them a better standard of living, he said. With a better standard of living, Campbell said there is an assumption that with a higher income, people will spend more, helping businesses and boosting the economy.

On the other hand, some people believe minimum wage hurts businesses by forcing them to raise prices and cut labor costs, increasing unemployment, he said.

No matter what side of the spectrum they lean toward, Campbell said workers would see the biggest impact from the possible minimum wage increase.

“They either get a higher salary or they lose their jobs,” he said.

If wages do increase, Duffy said the ultimate goal is for businesses is to keep operating at the same level.

Until Congress makes a move toward minimum wage legislation, most businesses won’t be making many changes just yet.

“I think it’s just one of those things we’ll have to wait and see,” he said.

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