December 30, 2010 in City

Some fear wage increase will mean rise in prices

By The Spokesman-Review
Christopher Anderson photo

Anna Vercruyssen greets and seats a guest at Twigs Bistro and Martini Bar in RiverPark Square on Wednesday. The minimum-wage worker will receive a 12-cent-an-hour raise starting Saturday. “Anything helps,” Vercruyssen said.
(Full-size photo)

By the numbers

$7.25 an hour: Federal minimum wage.

$8.67 an hour: Washington’s minimum wage, starting Saturday. It’s the highest in the nation.

Entry-level workers will benefit from Saturday’s increase in Washington’s minimum wage, but the 12-cent boost in hourly pay could put a squeeze on business owners.

“Do we like the idea that minimum wage is going up? No,” said Nick Fjellstom, general manager of Spokane’s General Store. “This race to out-minimum-wage other states in Washington doesn’t help any businesses. When they force something like that, you have to raise your margins and therefore your prices.”

The new wage of $8.67 will be the highest of any state. The federal minimum wage is $7.25.

Several Spokane business owners fear the tough economy paired with the mandatory raises could mean higher prices for consumers and reductions in work force. But they hope to hold steady.

“It’s definitely going to affect us,” said Jeff Blackwell, co-owner of the five Twigs Bistro and Martini Bars in the Spokane area. “We have close to 260 employees, and most are in that minimum wage category.”

“We’re having to make up the minimum wage increase in other areas,” such as food costs, Blackwell said. If the expense is too much for the owners of the restaurants, raising menu prices or cutting staff are possibilities, but “there are no plans to do that now,” he said.

With an economy that’s been in a slump for a couple years and business owners trying to meet profit goals, there’s nothing left to cut, Auntie’s Bookstore owner Chris O’Harra said.

“We are not sure what the impact is going to be yet. We know it’s not going to be good because sales have not perked up substantially, so knowing that our costs are going up will make it difficult around here,” O’Harra said. “I don’t want to sound too negative because it’s good that people will be making more money,” but she wishes it wasn’t happening now.

Auntie’s employs 30 people, and the owner plans to keep it that way. However, “I will have to take a close look at everything,” she said.

At the General Store, Fjellstom expects to avoid an immediate impact from the higher wage. “We have most our (75) employees above that wage. But we will have to raise our entry level pay by 7 cents.”

The future could be a different story, he said. “Eventually, this could result in a reduction in work force.”

O’Harra said she’s trying to be optimistic about the future and will look to other businesses for ways to operate efficiently. “It’s hard for all of us,” she said, “not just small businesses but big businesses too.”

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