Some business leaders not opposed to minimum wage hikes
Raising the minimum wage has been a focus of conversation and action at both the state and national levels, and it is something that, if and when enacted, has an impact on businesses everywhere — including those in the Town of Windsor.
A couple prominent business managers in the area and the county’s director of economic development took a few moments recently to share their thoughts on the subject.
Mark Pierce is the vice president of operations of Mid Atlantic Dairy Queen, which has 14 stores in Virginia, including the one located in Windsor at 61 W. Windsor Blvd.
He said he is not opposed to minimum wage hikes, but he noted that they do create new challenges and have sometimes negative and sometimes positive effects as far as the bottom line goes.
“I’ve been doing this for a very long time,” he said. “I started in March of 1986. Every time we’ve had a minimum wage increase, we’ve actually had a good sales year.”
The U.S Department of Labor states that the federal minimum wage for covered nonexempt employees is $7.25 per hour. According to the Code of Virginia, as of May 1, the minimum wage in the commonwealth moved up to $9.50.
“We’re at the point now, just like every other retail business is, where we’re not paying minimum wage anyway,” Pierce said. “We pay above minimum wage — well above it. Now, I don’t think all fast-food restaurants are, to start, but we have been for a long time now — I mean years.
“When the minimum wage hike that we just had a few months ago came into effect, we actually raised everybody up even more that was already making more in our company,” he said. “So yes, it did cost us a lot of payroll dollars when minimum wage just went up a few months ago.”
Pierce asked and answered a key question that comes up in connection to an increase in the minimum wage: “Do we get better help because minimum wage goes up? Well, no, because you’ve got the same help.”
He indicated that some have said better pay will mean better workers.
“Well, you’re not going to get better help,” he said. “You’re going to pay more for the same help, really.”
But Pierce made clear he approves of increasing the minimum wage.
“I will tell you I am a fan of minimum wage going up because I know it was $7.25 an hour, and you cannot feed a family or even yourself on that,” he said.
Gabrielle Olya, with GOBankingRates.com, wrote that President Joe Biden tried to incorporate raising the federal minimum wage to $15 an hour in the $1.9 trillion American Rescue Plan, but this measure ended up being dropped before the bill passed. Biden did, however, recently issue an executive order to raise the minimum wage from $10.95 to $15 for federal contractors.
Olya noted that in addition, some individual states, cities and counties have implemented a $15 minimum wage, as have several major companies.
But not everyone is on board with raising the minimum wage, with some analysts believing that over 1 million Americans would lose their jobs, Olya wrote. Research conducted by the Congressional Budget Office also found that an increase in the minimum wage would “reduce business income and raise prices” as companies pass on the higher costs of labor to consumers. In addition, it could slightly reduce the country’s total output.
Pierce shared what would happen with his store in Windsor if the federal minimum wage went up to $15.
“Well, obviously, the cost would be passed on to inflation to our customers, just like everybody else would have to,” he said. “Nobody can absorb a 75% wage hike.”
For Mid Atlantic Dairy Queen, the hike would not be mitigated much by the fact that it already pays more than the current state minimum wage because the company would still want to pay its workers more than whatever the minimum wage happened to be.
“If minimum wage is $9.50 and we’re paying that person $11.25, when they move it to $15, we’re going to pay that person $17.50,” Pierce said. “We would have to (in order) to run our business the way we want it run.”
Jake Redd, owner of Redd’s Storage at 45 W. Windsor Blvd. in Windsor, said he did not have too strong a stance on the minimum wage issue.
Like Pierce and Mid Atlantic Dairy Queen, he offers wages in excess of the minimum, and also like Pierce and Dairy Queen, he is having trouble hiring needed staff.
“I’ve been offering $10 and $12 an hour for general labor help from young people, even high schoolers that were kind of looking for jobs,” he said, noting that he thought he could get together a team, but it has not happened. “It was a lot different when I was that age. I would have jumped on it, and I’m not far off of that age, honestly. It’s just that’s how much has changed.”
He noted that in his opinion, the market is too artificial right now.
“In my opinion it’s got everything to do with the unemployment market right now and what they’re paying for unemployment and everything related to COVID (as to) why this market is so crazy, that along with a few other things, I guess,” he said.
He said he has no idea how raising the minimum wage would affect the market as it exists right now.
“From what I’m seeing, what’s so hard for me as a brand new business finding some (employees) is that right now, everyone else is trying to find people,” he said.
But if the minimum wage were increased again, he said, “I don’t think it would affect my business too poorly if it was raised to $15 an hour.”
He said he is willing to pay more and does pay more because the market rates — even for entry-level, younger workers — demand it.
“I think that the market is proving itself to be stronger than any of the state or federal laws,” he said.
Chris Morello, Isle of Wight County director of economic development, acknowledged the challenges a rising minimum wage can pose to businesses, but he also expressed optimism that increases will be a net positive.
“Many of our small businesses sustain themselves on relatively thin profit margins, and labor cost increases of any type will always threaten worker hours and possibly even jobs,” he said. “However, the last 14 months shed light on the remarkable amount of resiliency and courage Isle of Wight businesses continue to demonstrate, so I remain hopeful that workforce and consumer spending benefits will far outweigh negative impacts, overall, as the minimum wage rises.”