Some federal lawmakers want to raise the federal minimum wage to $10.10, but some Springfield business owners say the increase would hurt them and, ultimately, the workforce.
U.S. Sen. Sherrod Brown, D-Ohio, is a co-sponsor of the Fair Minimum Wage Act of 2013, which was introduced in March and would raise the wage rate in three steps of 95 cents. It also then calls for automatic annual increases linked to changes in the cost of living.
The proposed $10.10 is still less than the $10.80 that Job and Family Services of Clark County considers a sustainable living wage in the area.
Brown promoted his plan at a stop in Dayton on Friday and in conference calls last week.
He said minimum wage workers in Ohio only make about $16,000 a year, “which simply isn’t enough to do what people need to do to fill their gas tank, put food on the table, send their kids to school and have a decent place to live,” Brown said last week .
But area business owners say they are already struggling with just a recent state rate increase, which rose to $7.85 this year from $7.70.
“One of the main effects is that it’s caused discontent among employees,” said Linda McGee, a co-owner of the Subway restaurants on Derr Road and South Limestone Street.
She said resentment occurs when one employee has worked his or her way up to a certain wage, and another person gets a similar wage because of a minimum wage bump.
“So we have to continue to bump everyone else up and the costs become widespread,” McGee said.
Costs have already gone up, McGee said, because of the rise in gas for delivering ingredients to the stores. With a higher minimum wage, she said the restaurant may cut back on employees.
In his conference call, Brown argued that the Fair Minimum Wage Act would create jobs. Increasing the wage would create an additional $33 billion in gross domestic product, he said.
“This does not cause a loss in jobs, this causes an increase in jobs because economic activity would generate 140,000 new jobs over the course of three years,” Brown said.
The percentage of workers making the federal minimum wage or less has fallen for the second year in a row nationally and in the state.
A report released by the Bureau of Labor Statistics shows that the percentage of workers earning $7.25 or less is 4.7 percent nationally and 4.5 percent in Ohio, down from 5.2 percent and 4.7 percent respectively.
Because Ohio’s minimum wage is already higher than the federal minimum wage, many of the workers counted in the BLS data are most likely tipped workers, who currently make $3.93 an hour in Ohio.
Brown said under his new bill, he wants to raise the federal minimum wage rate for tipped employees from $2.15 for the first time in 20 years. There is no set rate proposed, but it will rise to 70 percent of the normal minimum wage rate.
Employers such as Young’s Jersey Dairy hire mostly minimum wage employees, both tipped and not, especially during the peak summer season.
“We don’t plan to raise prices this year with Ohio’s increase, but if it went up (for the Fair Minimum Wage Act) that would be a challenge for us to maintain prices where they are,” said Ben Young, human resources director for Young’s Jersey Dairy operations, which includes the Golden Jersey Inn.
Young’s Jersey Dairy owner Dan Young is currently with the National Restaurant Association in Washington to talk with lawmakers.
“They’ll talk about our concerns as small business men and women and how minimum wage could affect us and our workforce and prices,” Ben Young said.
In the meantime Ben Young said the dairy will try to increase efficiency while still maintaining service standards.
“At times we may try to use less labor, or buy technology that may be more efficient and cost effective and use less hourly staff,” Ben Young said.
Many employers have opted for paying slightly more for an employee that does more tasks. While the percentage of employees making the federal minimum wage has decreased, workforce expert Amy Donahoe said she still thinks wages are lower, though a little above minimum wage.
“Right now when you look at what employers are wanting in a candidate there’s a lot there and it’s a lot more than a minimum wage job,” said Donahoe, director of hiring and employer services for the Greater Springfield Chamber of Commerce. “These are combined positions where employers farmed out different pieces of positions they have had to eliminate.”
Donahoe said many times the pay is still too low for the amount of tasks someone needs to do.
“I love the idea of starting at a wage and having gradual increases fairly quickly based on performance or even based on just showing up,” Donahoe said.
McGee’s Subway locations do this to retain the best employees. All of her employees start at minimum wage, and then receive increases after 30 days, 60 days and then six months.
“We’re one of the only restaurants that do that,” she said. “It helps us retain people who are good.”
Percent of workers who make $7.25 an hour or less
2.7 percent in Ohio
2.3 percent nationally
2.3 percent in Ohio
2.3 percent nationally
2.3 percent in Ohio
3 percent nationally
4.3 percent in Ohio
4.9 percent nationally
5.2 percent in Ohio
6 percent nationally
4.7 percent in Ohio
5.2 percent nationally
4.5 percent in Ohio
4.7 percent nationally
SOURCE: Bureau of Labor Statistics
Business reporter Everdeen Mason regularly analyzes labor statistics, wage rates and unemployment data to bring you the latest news on Springfield jobs.