NEW YORK — Workers in five states could get a raise after Election Day.
Some small-business owners say raising the minimum wage will pressure their companies, forcing them to cut employees’ hours or jobs. Others say it’s the right thing to do for workers and the economy.
Minimum-wage referendums are on Tuesday’s ballots in Alaska, Arkansas, Illinois, Nebraska and South Dakota, where minimums range from $6.25 to $8.25 an hour. Higher minimums were already approved this year in 10 states, the District of Columbia and Seattle.
Ken Jarosch thinks he’ll have to raise prices and hire fewer part-timers for his Jarosch Bakery, in Elk Grove Village, Ill., if the state’s minimum rises.
Illinois’ referendum is nonbinding, giving the state legislature the voters’ opinion on the measure. Jarosch’s costs would rise about 5.5 percent if the wage rises from $8.25 to $10. Of his 60 employees, he has about a dozen high school students earning minimum wage.
Companies are more likely to raise prices than cut jobs. Thirty percent would pass along an increase to customers, according to a May survey by Pepperdine University’s Graziadio School of Business and Management. Fourteen percent said they’d cut hours, and nearly 12 percent said they’d lay off employees.
While 10 state legislatures voted to hike the minimum wage this year, it rose in 11 others because of inflation. About 3.3 million, or 2 percent, of the workforce is at or below the federal minimum, according to the Labor Department.
Seasonal workers at Rick Poore’s screen printing and embroidery company in Lincoln, Neb., earn the minimum wage. Tuesday’s referendum could raise the state minimum from $7.25 to $8 on Jan. 1 and another $1 in 2016.
“That’s not going to break my bank,” says Poore, owner of Shirts101. If workers earn more, they’ll have more money to spend and help the economy grow, Poore says. “They can’t buy it if they don’t have the dough.”
Eighty-one percent of small-business owners who pay hourly wages pay above the minimum, according to a survey by The Hartford. Two-thirds of those owners support raising the federal minimum.
But as much as some owners believe the minimum wage should rise, higher rates pose a challenge.
Andy Carlson budgets each year for a higher minimum wage because Colorado’s minimum, now $8, rises with the cost of living. About five of the 60 staffers at his two Ace Hardware stores in Denver earn the minimum. He believes the minimum should rise along with inflation, but he’s concerned about the calls for $10.10 per hour.
“At some point,” he says, “there’s a business reality that we can’t continue to add people regardless of the cost.”
The referendums
Five states have minimum-wage referendums on Tuesday’s election ballots. A look at the potential changes:
State Current wageProposed wageAlaska$7.25$8.25Arkansas 6.257.50Illinois8.2510.00Nebraska7.258.00S. Dakota7.258.50
