Small-business owners are giving mixed reviews regarding the latest Senate proposal designed to slowly raise the minimum wage and cushion payroll costs. The legislation, which passed the Senate earlier this month and now pending in the House, would immediately bring the minimum wage from $8.25 to $9 an hour and then increase it by 50 cents per year until it reached $11 in 2019. The climb in wages would happen more gradually than called for under previous bills from sponsor Sen. Kimberly Lightford, a Maywood Democrat.
This revamped version, Senate Bill 11, would offer small businesses with 50 or fewer employees a tax credit of up to $1,500 per minimum wage worker for the first three years — until 2017. During this period, Lightford says, the bill would also freeze Chicago’s minimum wage at $13 an hour— without an annual cost-of-living adjustment, thus keeping their wages in line with the rest of the state.
Lightford, who has been pushing for a higher minimum wage for years, says she won’t add a caveat for big companies. “This is something to help small businesses who perhaps may not be as strong as a large corporate business, and this will allow them an adjustment period.”
Gov. Bruce Rauner proposed a different concept in his State of the State address — a wage increase to $10 by 2022. Rauner has not taken a stance on Lightford’s bill, but has said he is willing to negotiate on the issue.
Kim Clarke Maisch, state director for the National Federation of Independent Businesses, says her members adamantly oppose Lightford’s bill, “A tax credit wouldn’t change their minds.” Her organization represents 11,000 sole proprietorships and privately held small businesses. The majority of them would be eligible for the credit.
The Illinois Chamber of Commerce shares similar opinion. “We don’t think the minimum wage is actually going to help businesses — except increase costs,” says Jay Shattuck, who heads the Chamber’s Employment Law Council.
Shattuck thinks the bill is difficult for employers to navigate. “It’s extremely convoluted. The way for an individual to improve on their wage potential is to get the additional training, education and experience necessary to move and advance within a particular field,” he says.
One small business owner agrees. Hank Meyer, who started BJ’s Market & Bakery in 1992, says paying his employees more may slow down business. “If wages increase, I need to increase the price of the food I serve, and when you’re talking about my community, the African-American community, I’m not sure how much my customers are willing to tolerate.”
Meyer, who staffs fewer than 50 people between two locations on Chicago’s south side, opposed raising Chicago’s minimum wage. He says his main concern with wage hikes is having to lay off workers to remain competitive. “Paying more for a commodity doesn’t make it more special,” says Meyer. “ I think it potentially displaces the very people the law was looking to benefit.”
Meyer views low-paying jobs as stepping-stones and expects his employees, who are mostly teens, to move on. Raising the minimum wage “doesn’t help people get any better. It just gives them more money — but only for a period of time. There needs to be more thought to helping people improve their (overall) situation,” says Meyer. “I see so many wasted lives, wasted talent.”
On the other hand, when the Great Recession hit in 2008, David Vorris, owner of Hel’s Kitchen Catering, voluntarily gave his employees a pay raise — instead of cutting back.
“We’ve always understood that one of the most important things in any small business is to create a culture where the employees feel valued,” Vorris says. “We do it in a variety of ways: listening to employees when they have comments, questions and ideas and . . . paying them a fair wage.”
As a result of boosting earnings, Vorris says his Northbrook-based company gains increased sales, worker satisfaction and profits. He also benefits from eliminating hidden costs associated with having a high turnover — retraining and quality control. When “payroll goes up, you have to pay more in workers’ comp,” says Vorris. “But, you’re getting more productivity out of your people, (and) getting a better degree of quality control because they do the job and they know the job.”
By raising wages, Vorris, who started with 22 full-time and 80 part-time seasonal employees in 2009, hired eight additional full-time staff within a five-year period. However, profit and growth are not his only measurements of success. “As sales go up, we hire more people. That’s what good businesses do — that’s how we grow our business. But . . . my free time increased also. That’s a huge benefit,” Vorris says.