Augusta Economy

More News | Fort Gordon | Plant Vogtle | Savannah River Site | Editor

Augusta-area small employers wary of proposed minimum wage increase

  • Follow Local Business

The thought of raising the federal minimum wage to $10.10 leaves some local small business employers filled with apprehension.

Back | Next
Driver Brandon Crandall sets out to make a delivery from Marco's Pizza on Furys Ferry Road. Many of Marco's 180 employees are part-timers who are paid minimum wage, $7.25 an hour.  SARA CALDWELL/STAFF
SARA CALDWELL/STAFF
Driver Brandon Crandall sets out to make a delivery from Marco's Pizza on Furys Ferry Road. Many of Marco's 180 employees are part-timers who are paid minimum wage, $7.25 an hour.

Marco’s Pizza franchisee Woody Johnson operates three pizza chain stores across metro Augusta. Johnson and his business partner will add three more locations in the area by next summer, doubling the payroll to about 180 people, many of whom are part-timers paid the current minimum wage of $7.25 an hour.

“Eventually, it’s going to get where we can’t grow more stores and we’ll have a difficulty just growing the stores we’ve got with employees,” he said. There have been three minimum wage increases in the past seven years. “So at some point for us, it’s going to kill growth, kill jobs,” he said.

And the nearly $3 per hour increase in wages would affect more than those making the minimum. At Green Thumb West Nursery and Garden Center in Martinez, the starting wage for David Bokesch’s team of 11 workers is $8.50 per hour.

Bokesch acquiesced that $7.25 is not enough to support a family, but wondered if raising it to $10.10 would make much of a difference.

“It’s a tough question,” he said. “I think it’s fine for politicians, especially in election years, to say things, but they’re not down in the trenches with small businesses. They don’t know what it’s like.”

Bokesch said he believes knowledge and performance should dictate an employee’s pay.

Small business bears the brunt whenever legislators raise the minimum wage, said Kyle Jackson, Georgia’s director for the National Federation of Independent Business.

“The minimum wage increase always disproportionately impacts small businesses versus large businesses, because it’s more likely that a small employer is going to pay somebody around the minimum wage,” he said.

The Congressional Budget Office reported in February that total employment could plummet by an estimated 500,000 workers, or 0.3 percent, if the minimum wage was raised to $10.10 by the second half of 2016. The jobs would be lost because businesses would not be able to accommodate the increased wage, so eliminating positions would be the only way to sustain current payrolls costs.

But the CBO analysis also predicted that the minimum wage increase would likely result in 16.5 million low-wage workers earning higher incomes during an average week and could bring about 900,000 people out from below the poverty level.

“To me the minimum wage debate is really more about noise than it is about sound economic policy,” Jackson said. “When we’re just starting to inch and crawl our way out of the economic recession the last thing we want to do is saddle small employers, who are the engine of job recovery, with more and more regulatory and financial burdens.”

The push, led by President Obama, to boost the hourly minimum wage by nearly $3 is not well-received by Chuck Baldwin, who owns French Market Grille in Surrey Center with wife Gail.

“If they increase it, a business like ours has no choice but to pass it on to the customer,” Baldwin said. “All you’re doing is making the product more expensive when people go out to eat. It kind of backfires on people. They have good intentions, but they won’t like the repercussions of it.”

At Baldwin’s restaurant, new employees start at minimum wage but often earn a raise within three months. The average hourly rate for Baldwin’s 45 employees is already above the proposed $10.10 rate, he said.

The minimum wage, he added, was designed to offer short-term, entry-level pay, not provide a sustainable salary. Baldwin said he’d most likely have to scale back his staff size if the proposed increase went into effect.

“I’d be amazed if every restaurant or everyone (in the service industry) didn’t do that same thing,” he said. “Unemployment would go up – let alone the prices at the register, too. It would kind of be a dual negative.”

Georgia Bank & Trust President and CEO Dan Blanton said the backbone of this country’s economy is small business, which continues to struggle.

“What you need to do really is protect these small businesses that are providing these jobs,” he said. “You make it harder and harder for them, and they’ll scale back. They’ll go out of business and then all those jobs are lost.”

Blanton said that although the Augusta-based bank employs minimum wage workers, he doesn’t foresee a situation in which the institution’s operations would be affected by a wage increase.

Earlier this year, Obama signed an executive order that raised the hourly minimum wage to $10.10 for federal contractors. The order will take effect Jan. 1, 2015.

Jackson said he believes a similar wage increase in the private sector will be a harder sell.

“I’m not in Washington and I’m certainly not behind those closed-door meetings, but it would seem that the President faces a pretty uphill climb in the House certainly and maybe even in the Senate,” Jackson said. “Certainly in an election year, you’re going to find most reasonable people to be pretty sensitive to adding new burdens on small employers.”

CRITICISMS OF RAISING THE MINIMUM WAGE

The primary value of minimum-wage jobs is that they are learning jobs. They teach inexperienced employees basic employment skills that make them more productive and enable them to earn raises or move to better jobs.

Two-thirds of minimum-wage workers earn raises within a year.

Correctly adjusted for inflation, the minimum wage currently stands above its historical average since 1950.

Macroeconomic modeling shows the proposed minimum wage increase would eliminate 300,000 jobs. That means fewer opportunities for unskilled workers to get started in the labor market and move their way up.

When businesses have to pay higher wages, businesses hire higher-skill workers, freezing the least productive, most disadvantaged workers out of the job market. Consequently minimum wage increases harm the very people that proponents of the laws most want to help.

Only 2.9 percent of wage earners earn the federal minimum wage. Most minimum-wage earners are teenagers or young adults, not heads of families.

Over half of minimum-wage earners are between the ages of 16 and 24. And two-thirds work part time.

Source: The Heritage Foundation

Comments (32) Add comment
ADVISORY: Users are solely responsible for opinions they post here and for following agreed-upon rules of civility. Posts and comments do not reflect the views of this site. Posts and comments are automatically checked for inappropriate language, but readers might find some comments offensive or inaccurate. If you believe a comment violates our rules, click the "Flag as offensive" link below the comment.
allhans
24985
Points
allhans 03/22/14 - 08:39 pm
7
2
Employees now making $10.00

Employees now making $10.00 an hour will expect to get the same increase which means 13.00 an hour.
You can't win.

Little Lamb
49255
Points
Little Lamb 03/22/14 - 10:27 pm
6
3
Inflation

You got it, Allhans. Raising the minimum wage would start a death spiral of wage / price inflation. Inflation is the cruelest tax. We'd better keep the minimum wage where it is.

deestafford
32245
Points
deestafford 03/22/14 - 10:41 pm
7
2
The raise in the minimum wage has many faults...

The raise in the minimum wage has many faults. I will illustrate one by a simple example.
Assume one-half of the pizza restaurant owner's 180 employees are paid the minimum wage and he has 90 workers working seven days a week, 8 hours a day for 52 weeks. Of course, these are not the same workers but using shifts it comes out to the 90 workers.

90 workers x $2.85/hour increase in minimum wage = $253.50 per hour wage increase for the owner.

$253.50/hour increase x 8 hours in a day = $2,028 per day increase for the owner.

$2,028 per day x 7 days a week = $14,196 per week increase for the owner.

$14,196 per week x 52 weeks in a year = $742,092 for the owner in a year.

Now, there can be some differences in the number of hours the restaurant is open such as 10 vs 8 but this simple example shows that the labor costs for just the minimum wage workers, not including the wage differential needed in the above comment, is almost three quarters of a million dollars a year. A small business does not have that type of money laying around to fulfill some "feel good, vote getting" legislation.

The owner has to increase prices, lay off people, or go out of business. Contrary to what the left thinks, business are not like Scrooge McDuck with a back room filled with gold they can dig into whenever they want.

Once again, ignorance reigns supreme in the La, La land of liberalism.

Casting_Fool
1175
Points
Casting_Fool 03/23/14 - 01:11 am
9
2
So, let me get this

So, let me get this straight.

They're looking at getting around 900,000 people above the income poverty level at the cost of 500,000 people losing their jobs...

Am I missing something?

Radwaste
427
Points
Radwaste 03/23/14 - 03:39 am
7
2
Fundamental Mistake!

Excuse me, but everyone is missing a HUGE, fundamental feature of Federal declarations like the Minimum Wage:

THE MINIMUM WAGE SETS THE VALUE OF ONE HOUR OF WORK, IN DOLLARS.

The unit, "one hour of work" CANNOT be changed.

In other words, the Feds now say that the dollar is worth about 39% LESS versus that one hour of work.

Americans will let them do this, because they have no idea what "money" is. It's not "cash".

Junket103
471
Points
Junket103 03/23/14 - 06:00 am
5
2
Let the Marketplace Decide

This is one area where government needs to back off. Let the marketplace decide the true value of wages. Each business owner knows what they pay their employees is a matter of what the marketplace will support. Pay too little and they lose quality and longevity in their workforce. Pay too much and they go broke or may have to charge more than a competitor or employee fewer individuals for the same level of production.

billcass
1087
Points
billcass 03/23/14 - 06:21 am
4
3
None of their business

As with many ideas from the left, this has a nice feel to it. After all, wouldn't it be better if poor people made more money? Who could oppose that? But like many other ideas from the left, it comes at a price, and that price is freedom. It is nobody's business what I pay my employees. What is better, that I pay one employee ten dollars an hour, or two employees five dollars an hour? That is my decision, and their decision. Nobody else should get a vote.

JRC2024
10560
Points
JRC2024 03/23/14 - 06:50 am
3
1
All mine are on production

All mine are on production pay. They produce more, they make more.

deestafford
32245
Points
deestafford 03/23/14 - 07:22 am
4
3
A few additional points...

A few additional points.

The "poverty line" is an artificial level of income established by some bureaucrat sitting somewhere in a cubicle and means nothing except an arrow in the quiver of the left to extract more money from the society and increase the number of moochers. The "poverty line" in Augusta is much different than in NYC. Our "poor" would be middle class or wealthy in any other country.

We, the workers, and the economy would be better without the minimum wage and the market place decided. There would be more people working and high production.

If increases in the minimum wage raise people above the "poverty line", why hasn't it done it it the past? The answer is it doesn't. The minimum wage is only a leftist tool to use further its socialistic agenda. We have spent $5T on the war on poverty and raised the minimum wage dozens of times, yet the "poverty level" remains at 19% where it was when LBJ's "War on Poverty" started by in 1965.

JRC2024
10560
Points
JRC2024 03/23/14 - 09:40 am
7
1
Amen, deestafford. I agree

Amen, deestafford. I agree with you on this. Afterworking crews for 44 years I find that in some people the more they make the less they want to work. I just left a installer who wanted to work today so we went to the job. He keeps complaining about how he is broke. He could have done the job in 5-6 hours and earned $178.00 which is $29.66 to $35.66 per hour. He decided not to work today but come back Tuesday because he was tired. He left tired and broke. How do you feel sorry for people like that. Yesterday he would not do the job because he went to Columbia SC for the day. Well La De Da .

itsanotherday1
48419
Points
itsanotherday1 03/23/14 - 10:00 am
8
0
"All mine are on production

"All mine are on production pay"

That is really the wisest way to pay people; either by production or some form of profit sharing. Take a McDonald's store. If the owner paid $8/hr base and the potential to make an extra few grand as bonus, it is a win-win. You get employees that are committed to excellence, and for those that aren't, their fellow employees will put the heat on them to protect their own bonus.

deestafford
32245
Points
deestafford 03/23/14 - 10:36 am
3
1
Mentioning the word "meritocracy" to a liberal gets....

Mentioning the word "meritocracy" to a liberal gets you the same reaction as showing a cross to a vampire---fear and revulsion.

corgimom
38761
Points
corgimom 03/23/14 - 12:03 pm
2
1
Folks, this is all about

Folks, this is all about getting more tax revenue and getting more money in for SS and Medicare.

It'll also knock a lot of people out of getting EIC, reduce food stamps and the amount the gov't pays for low-income housing, etc.

You can't have it all ways, you either want to cut government spending or you don't.

corgimom
38761
Points
corgimom 03/23/14 - 12:04 pm
1
2
As for making it more

As for making it more expensive for people going out to eat, maybe that's not so bad.

I remember when going out to eat was special, done only a few times a year, not as a regular thing.

KSL
144758
Points
KSL 03/23/14 - 12:21 pm
2
1
The increase in going out to

The increase in going out to eat has something to do with working mons, as well.

Dixieman
17604
Points
Dixieman 03/23/14 - 12:42 pm
4
1
Totally stupid

Ask a liberal who supports this to go large -- let's make it $100.00 per hour and really cure poverty.
"But at that level lots of people would lose their jobs!"
Um, yes.
Is the light starting to dawn yet?

corgimom
38761
Points
corgimom 03/23/14 - 01:37 pm
1
1
KSL, I worked, and I cooked

KSL, I worked, and I cooked at home, nearly every night.

We rarely ate out.

Now, it's a very commonplace thing. You can't hardly turn without tripping over a restaurant.

galaxygrl
1350
Points
galaxygrl 03/23/14 - 02:34 pm
1
0
$10.10

I haven't seen anyone talk about this but $10.10 would make a lot of people ineligible for food stamps and other benefits because it would be above the amount to receive them. This can be good or bad because it is still not enough to support a family that needs help.

burninater
9943
Points
burninater 03/23/14 - 04:08 pm
1
1
"So, let me get this

"So, let me get this straight.

They're looking at getting around 900,000 people above the income poverty level at the cost of 500,000 people losing their jobs...

Am I missing something?"
------
Yes, you are missing something. You conveniently ignored the biggest number in that equation, which was the income increase for 16.5 MILLION workers.
-------
-------
"I haven't seen anyone talk about this but $10.10 would make a lot of people ineligible for food stamps and other benefits because it would be above the amount to receive them."
-------
So, with some alteration to cost assumptions and pricing, the actual consumers of labor value increase -- the shareholders and patrons -- would be paying for the real labor cost? Rather than reaping private benefits from taxpayer-subsidized labor? There's a free-market concept for you.
--------
--------
"Ask a liberal who supports this to go large -- let's make it $100.00 per hour and really cure poverty.
"But at that level lots of people would lose their jobs!"
Um, yes.
Is the light starting to dawn yet?"
-------
This is such a ridiculous non-argument.

Does $10 = $100? Anywhere in reality? Is a ~45% increase in the minimum wage the same as a ~1280% increase?

This is like arguing that a one pint blood transfusion is stupid because a 19 gallon blood transfusion would be fatal. Is this in any way a serious, or even useful, line of argument?
--------
--------
"Mentioning the word "meritocracy" to a liberal gets you the same reaction as showing a cross to a vampire---fear and revulsion."
--------
No, liberalism invented meritocracy. It was an attempt by liberals to level the caste system created by inherited wealth and inherited status -- a caste system inherently reinforced by traditional (conservative) social value systems.

But back to the topic at hand: In what way does meritocracy produce the right for employers to undervalue labor that is in turn subsidized by the taxpayers? How does that have anything to do with meritocracy?
---------
---------
"This is one area where government needs to back off. Let the marketplace decide the true value of wages."
-------
The gov't IS part of the marketplace. This idealized view that the marketplace is simply microeconomic supply and demand curves on an xy-plot is a complete denial of reality. We are here, now, in this world. The complex interactions of economic and social policy have produced a situation where some employers exploit taxpayer-subsidized labor. Incremental minimum wage increases are a simple tweak in a complex system, and it forces those businesses that have organized their cost structure around the exploitation of taxpayer subsidy to assume the true cost of their labor.

KSL
144758
Points
KSL 03/23/14 - 03:40 pm
0
1
corgi

So did my mother, who is now 90.

allhans
24985
Points
allhans 03/23/14 - 03:42 pm
2
2
Are we assuming that the

Are we assuming that the eligible amount for the poverty level will not increase along with the base wage of a person?

Give me a break!

itsanotherday1
48419
Points
itsanotherday1 03/23/14 - 06:13 pm
0
1
The most stupid part of the

The most stupid part of the argument is that it the emplyee will be making more of a "living wage. It inflates the cost of everything, leaving the $10/hr person without much more purchasing than they had at $7.25. Artificial manipulation of supply and demand in a free market is doomed to failure.

burninater
9943
Points
burninater 03/23/14 - 06:36 pm
1
0
"The most stupid part of the

"The most stupid part of the argument is that it the emplyee will be making more of a "living wage. It inflates the cost of everything, leaving the $10/hr person without much more purchasing than they had at $7.25."
-----
Think about that conventional "wisdom" for a moment.

A $2.75 hourly rate increase is a ~45% increase over the current minimum wage.

Are you saying, with a straight face, that a 45% income increase for the poorest 10% of the workforce will result in almost 45% inflation within the overall economy?

Seriously?

That is an economic absurdity.

corgimom
38761
Points
corgimom 03/23/14 - 07:30 pm
0
0
Dee Stafford, your math is

Dee Stafford, your math is wildly inaccurate.

If you think that a pizza store has 30 people working all the time, you are very mistaken. (90 employees, 3 stores, avg. 30 people per store.)

And that's where your entire calculations are just blown out of the water.

Any pizza restaurant that had 30 people working 8 hours per day - or even 240 man hours per day- would go out of business in a week. If they are open 12 hours per day, that's 20 people per hour.

And that's what happens when you do those kinds of calculations, they are absolutely meaningless. Your math means nothing. Sorry.

corgimom
38761
Points
corgimom 03/23/14 - 07:34 pm
0
0
If a lot of fast-food

If a lot of fast-food restaurants in Augusta closed, would that necessarily be a bad thing?

Because people would still eat pizza. They would buy it in the supermarkets premade or make it themselves.

All I know is that the people that own those fast-food franchises make a fortune, they could pay more and still stay in business.

The marginal ones would close, but that's ok too.

burninater
9943
Points
burninater 03/23/14 - 07:57 pm
0
0
Even if you took Dee's math

Even if you took Dee's math at face value, think it through:

90 employees. I think it would be reasonable to expect a productivity rate of 1 pizza/employee/15 minutes.

That's 360 pizzas/hour divided by $253/hour wage increase.

About 75 cents more per pizza, if the business owner absorbs NONE of the added cost.

That's going to put people out of business?

Completely non-credible.

justthefacts
25483
Points
justthefacts 03/23/14 - 08:14 pm
0
0
Then why not

$15.00 hour? At what point does it make a difference?

burninater
9943
Points
burninater 03/23/14 - 08:44 pm
0
0
"Then why not $15.00 hour? At

"Then why not $15.00 hour? At what point does it make a difference?"
--------
Why not discuss the actual, proposed change of $10.10 an hour rather than a fictional rate that exaggerates the increase by 500%?

These "if some is good, then more must be better" arguments are simply weak attempts to avoid looking at the actual impact of the actual proposal.

I could be wrong, but I believe the $10.10 number is derived by adjusting the minimum wage to match its highest level relative to CPI, which occurred in 1968. Essentially, the logic is that if the minimum wage had increased in the same way that Social Security and Medicare benefits, for instance, have increased -- as a function of CPI -- then it would already stand at $10 now.

corgimom
38761
Points
corgimom 03/23/14 - 09:26 pm
0
0
I believe the owner when he

I believe the owner when he says he has 90 workers for three stores- but if you go into a fast-food pizza place, there usually isn't more than 5 people or so on duty. Maybe more, if they have waitresses, but they don't earn minimum wage. I've seen them, in non-busy times, have 2.

I'm guessing maybe they have 70 man hours per day, 40 of them are the manager. So when you look at a raise of $3.00 per hour for 30 hours per day, 365 days per year, that's an increase of $32,850 per year, not $742 K. $90 per day, if you sell 300 pizzas, that's a $.30 increase per pizza.

That's simplifying it, because I didn't include FICA tax, and unemployment taxes, but it wouldn't be as catastrophic as Dee would like to make it out to be. Burninator has the right idea.

Good job, Burn.

deestafford
32245
Points
deestafford 03/23/14 - 11:07 pm
0
0
What I was just trying to show was...

What I was just trying to show was how the impact of the wage increase would increase the cost to the employer a significant amount that is beyond something he cannot absorb. I'm sorry if you were not able to follow the jest even with the disclaimer that it was merely an example.

Do not confuse classical liberalism with the liberalism of today. The liberalism of today hates meritocracy.

The free market will set the wage at which the worker is willing to work and the employer is willing to pay.

As always, liberals think they know more than free market economics that the history that it has. They continue to think they can apply a macro government center solution to micro situations.

Back to Top
loading...
Search Augusta jobs