Consensus is low and emotions high as voters in several states will get the chance to weigh in on minimum wage levels during Election Day across the country Tuesday.
Initiatives to raise the minimum wage appear on the ballot in Alaska, Arkansas, Nebraska and South Dakota, and Illinois will have a non-binding referendum.
Higher minimums were already approved this year in 10 states, as well as the District of Columbia and the city of Seattle.
Some small business owners say raising the minimum wage will force them to cut employees' hours or jobs, while others say if workers have more, they will spend more, and help the economy.
I was recently in Rochester, Minnesota, and spoke to the owner of a business located just a few blocks from Mayo Clinic.
He hires temporary workers to bolster his permanent employee roster, and said he is constantly searching for ways to reduce hiring and head count through technology.
“I like owning – and operating – a business, and appreciate my role in the community providing jobs and paying taxes,” he said. “But between wage hikes and rising health care costs and all the rest, I am increasingly fearful about the future.”
Alaska's measure would hike the state's minimum wage from $7.75 to $9.75 by 2016. Arkansas' minimum wage would go to $8.50 by 2017, Nebraska's to $9 by 2016, and South Dakota's to $8.50 by next year.
The Ōnin Group, a privately held multi-regional staffing agency based in Birmingham, Alabama, says an $8.00/hr employee actually costs $11.43/hr, 43% above pay cost. And that doesn’t include the costs associated with recruiting.
Ken Jarosch told AP business writer Joyce Rosenberg he thinks he'll have to raise prices and hire fewer part-timers for his full-line scratch bakery located in the northwest suburbs of Chicago.
He says costs would rise about 5.5% if the wage floor goes from $8.25 to $10. Jarosch has about a dozen high school students earning minimum wage out of his staff of 60.
Further, he is concerned he might have to pay his workers even more, or risk losing them, if the city of Chicago approves a proposed minimum wage hike.
This past summer, a panel appointed by Mayor Rahm Emanuel recommended the minimum wage rise from its current level of $8.25 an hour to $9.50 next year. It would keep going up until hitting $13 an hour in 2018. After that, it would be adjusted annually to keep pace with inflation.
Crain’s Chicago Business reported, “there appears little doubt that the measure will be approved by the City Council.” Additionally, one group of aldermen recently introduced legislation calling for a $15 minimum wage.
Illinois Retail Merchants Association CEO Rob Karr said his group isn’t very hopeful that “economic realities will prevail.”
And added that “Chicago has a lot of border communities that will be at a competitive disadvantage” if the measure passes and nearby suburbs do not change their minimum-wage rate.
As far as what companies might do first, raise prices, or cut jobs, a recent survey by Pepperdine University's Graziadio School of Business and Management found 30% percent of the 3,600 small and mid-sized business owners surveyed would pass along an increase to customers, while 14% said they'd cut hours and 12% said they'd lay off employees.
The Minnesota business owner I spoke with said in closing, “I can’t continue to add people regardless of cost, and I can’t continue to pass on all of my rising costs to customers. At some point something’s gotta give.”