A hot topic of discussion following President Barack Obama’s State of the Union Address last Tuesday, is his proposal to increase the minimum hourly wage to $9 over the next couple of years. Currently, Illinois’ minimum hourly wage rate sits at $8.25, which is higher than the federal rate of $7.25.
Obama proposed the minimum wage increase be required to keep pace with inflation. However, local business leaders weighed in and said the increase could cause inflation, which in turn would put an additional burden on local businesses.
Princeton Sullivan’s Foods manager Mike McCall said anytime the minimum wage is raised, the price of items inflates to make up the difference.
“People don’t realize that when you raise the minimum wage, you have to raise retail and wholesale prices,” he said.
McCall said increasing the minimum wage would threaten the number of local jobs and the number of hours per job.
Currently, about 80 to 85 percent of Sullivan’s employees are paid minimum wage.
Spring Valley Economic Development Director Debb Ladgenski is torn on the issue. “While I completely understand that people need to have an income that allows them to support themselves and their families, the minimum wage also affects business’ existing wage scales,” she said. “This change may require them to incrementally raise the hourly wage of other employees, causing a larger financial burden on the business owner than most would consider.”
She agreed the cost increase could result in local businesses inflating costs for goods and services to recoup the expenses.
From a different perspective, Ladgenski, who also sits on the Richard A. Mautino Memorial Library Board, said while the basic premise of raising the minimum wage is good in this case, as well, all effects still need to be considered.
“We have a set budget from our tax levy, and increases in salaries would mean that we would have to reduce expenditures in other categories, such as our book budget to building maintenance, in order to meet those increases,” she said.
Spring Valley Mayor Cliff Banks believes in progression but said increasing the minimum wage would hurt local businesses.
“Every business is struggling to keep up because of the impact of the tough economy “ he said. “The people need to think about this decision and decide what’s best for them.”
Princeton Chamber of Commerce Director Kim Frey said Obama is right that a minimum wage increase could provide a boost and help some low income households, but asked at what expense?
“The increase could mean lower profits for businesses that employ minimum wage workers,” she said. “The cost of doing business in the state of Illinois has already proven to be extremely challenging. The risk of lowering these profits in an economy that’s finally starting to recover could potentially halt job creation, business expansion and change the direction of entrepreneurs.”
Frey explained the Federal Bureau of Labor Statistics has said only 2 percent of full-time workers are currently paid at or below minimum wage.
“Although there would be some benefit for those currently paid more than today’s minimum wage, but less than the proposed increase, I don’t believe that the president will have achieved his desired outcome,” Frey said.
Several area merchants declined comment on the issue.
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