Area businesses split on wage increase
Posted January 12, 2015 in Selected Press
As the relative standard of a livable wage sparks discussion and legislative shifts across the country, pay for minimum wage employees in Ohio was boosted 15 cents on Jan. 1, to $8.10 an hour.
Though that’s higher than the federal standard of $7.25, it’s still less than referendums for $10 or more that appeared on ballots last year in California and Illinois or the $10.10 recommended by President Barack Obama. Tipped employees in Ohio now make an extra 7 cents per hour, bringing their base pay to $4.05 an hour.
Those increases have been lashed to the inflation rate since Ohio voters opted in 2006 for annual increases based on the consumer price index.
Some Ashtabula area business owners were divided on the issue. Higher pay standards tighten overhead wiggle room and hamper hiring ability, yet all workers need wages that adjust for the ever-rising cost of living.
“It seems like a small increase, but it adds up,” said Ali Sarah, owner of both BB’s Mini Mart and Remix Apparel and Beauty Store along Center Street. “The less business we’re getting and the higher minimum wage goes up – it affects us.
“I don’t want to have employees working and thinking they’re not making enough, but again, I don’t want to lose money as well.”
Sarah said he had six employees when he opened up shop in 1997. He’s now down to three – two at the clothing store and one who helps him run the market – and all of them at minimum wage.
Sarah said he fills scheduling holes himself because he can’t pare down any further. He said he tries to freshen inventory as much as possible – the solution isn’t in staffing, it’s finding ways to draw in more business.
“We tried not getting rid of anybody. Every year, we just try adding … different shelving with different merchandise and hope that helps with paying our employees and paying the bills,” he said. “We’re just constantly adding new things.”
He said he suspects retailers in the metropolitan centers like Cleveland or Columbus can easily bounce back from incremental state minimum wage increases. Volume and traffic are consistently higher – that’s not the case in Ashtabula.
“Our customer flow isn’t enough to keep up with the bills,” he said.
There are about 277,000 low-wage workers in the state, according to nonprofit research institute Policy Matters Ohio. Minimum wage employees account for 4.1 percent of Ohio workers, according to data from the Bureau of Labor Statistics – just below the national median of 4.3 percent.
Census data gathered by the institute showed the wage hikes will account for about $36 million in economic growth in the state because of increased consumer spending.
“What we have seen over and over again in economic studies is by increasing the number of workers that are adequately paid, you increase the demand for consumer products,” said Amy Hanauer, executive director. “Your place of business has a little more cashflow coming through it if workers in your community are paid better.”
The institute is calling for Ohio to follow the lead of 19 other states that have pushed their minimum wages above $8.10. Job growth from the beginning of recession recovery to July 2014 has been centered around low-wage retail or food service jobs, which employ 2.3 million more people than before the downturn began, the institute found.
Before the state established its consumer price index scale, inflation essentially resulted in a salary cut for those workers at the bottom of the pay floor, Hanauer said.
“They’re making the same amount of money, but inflation has changed the value of that amount,” she said.
Whether a livable wage is $8.10 an hour or $10.10 an hour – a rate the institute backs – really depends on where workers live, Hanauer said. Rural residents generally pay more for transportation, while urban residents’ housing is far more expensive.
The Economic Policy Institute’s annual family budget calculator, which is based on 2013 data, shows that a family of four living in rural Ohio – with two children, two parents working full time and all having healthcare coverage – would need annual income of $59,670, or a $14.92 hourly wage for each parent.
A 40-hour work week at the new state minimum wage of $8.10 adds up to only $16,200.
Cam Tran, manager of Grumpy Grandpa’s along State Road in Ashtabula — one of two liquor agencies in the area, the other being Giant Eagle — said she looks at inflation-based wage increases from a neighborly standpoint.
She wouldn’t say how much her employees make, but the establishment has kept “the same employees that (they’ve) always had.”
“They’re kind of like our family,” she said. “(The minimum wage hike) does increase our overhead, but it’s for a good cause.
“People around here tell me how much they make and it’s poverty-level, basically,” she said. “That’s why there’s so much (federal) assistance.”
She said she feels $8.10 is not enough to live on, even in as low-cost an area as Ashtabula. To her, that makes the annual hikes “necessary.”
“It’s (for) the people that feed us,” she said.
Original Article: http://www.starbeacon.com/news/area-businesses-spl...