Business owners weigh merits of higher pay

The debate over lifting Pennsylvania’s minimum wage is reverberating among small-business owners in the Lehigh Valley who worry about the consequences.

They oppose a dramatically higher wage over fears that it will force them to cut staff, reduce employees’ hours or even put them out of business. Others champion a possible increase, citing the need for better pay.

At the center of the debate is a proposal by Gov. Tom Wolf to boost incomes for more than two million workers by raising the minimum wage to $12 an hour this July, and eventually to $15 an hour by 2025. The General Assembly has been considering the proposal as part of the state budget process, which is expected to conclude by June 30

Pennsylvania’s minimum wage – the federal floor of $7.25 per hour – has been the same since 2009.

While more Pennsylvanians have jobs than ever before, 1.2 million Pennsylvania households earning more than the federal poverty level still do not make enough to pay for essentials such as housing, food, transportation and child care, according to a June 2019 report by the United Way of Pennsylvania, a nonprofit.

When the number of households that live below the federal poverty level are added, the result is that 1.8 million, or 37 percent, of Pennsylvania households are struggling to survive.

Numbers like these are behind the governor’s push to raise the state minimum wage.

But what will be the cost to small businesses – which, according to the Pennsylvania Department of Community and Economic Development, a state economic agency, account for almost half of the private workforce in the state?  The agency reports that Pennsylvania has nearly one million small businesses employing 2.5 million people.

“I think raising the minimum wage that high is a mistake,” said Francis Pinter, owner of American Printing Unlimited, a commercial print shop in Easton that has been family-owned for over 30 years.

“I agree that there needs to be routine adjustments to the minimum wage, but an increase like this will force companies to cut hours, cut employees … businesses will close. Larger companies don‘t have a lot of employees at minimum wage, so an increase won’t affect their bottom line as much. Small businesses will be the ones hit.”

Pinter argued that the U.S. is built on small businesses, and if small business suffers, the whole country suffers.

“I think it will hurt us as a state more than help us,” he said.

Peter Mickolay is owner of Aykroyd Hardware in Bethlehem, a family owned hardware store that was established in 1954. He worries that the proposed minimum wage increase could eventually put him out of business.

“I don’t agree with it,” he said. “It will cause bigger businesses to automate more and hire less people. For small, independent businesses, it will make it more difficult to get by,and also cause us to hire less employees. We can only afford so much.”

“The market should determine what people get paid,” he continued. “We have a tight labor market now that allows for employers to pay a bit more. I just don’t like the government getting involved in things like this. For someone like me, raising the minimum to $15 an hour could push us right out of business.”

For Kosta Karaminas, owner of Angelo’s Restaurant, a family restaurant in Easton that was established in 1976, the topic inspires mixed emotions.

“The liberal Democrat in me says it is a good thing,” he said. “Wages have been stagnant for way too long and the cost of living is increasing. But the business owner in me feels that $12 and $15 an hour may be a little too much. It’s gonna hurt the small businesses.”

Karaminas feels that small businesses will be forced to raise prices to keep up with the wage increase, which could push away customers.

“I don’t know if it will be detrimental to my business,” he said. “I’m waiting to see what happens. It is time for wages to go up; I just don’t know by how much.”

Not all small-business owners oppose the proposed minimum wage increase. Some, like Bruce Haines, owner of Aardvark Sports Shop, a 35-year-old specialty running-shoe store in Bethlehem, believe a raise is long overdue.

“My personal opinion is that no one can live on $7.25 an hour,” he said. “For us, we don’t have any minimum-wage employees so it’s not going to affect us in the very short term. However I do have employees who are making less than $15 an hour, but over time I think I would be in line with $15.”

The current rate, he said, is simply inadequate.

“We have to acknowledge that people should not have to work two and three jobs to put food on the table,” he said. “It is a reasonable expectation to hope that your income should adjust with the rate of inflation.”

To Richard Master, CEO of MCS Industries, a state-mandated boost to the minimum wage would reflect the values of fairness that he believes the U.S. is built on.

Master helped grow his family’s small Palmer Township box-manufacturing business into a global home decor manufacturer with over 200 employees. He is a vocal national public advocate for government reforms that he believes will benefit business.

“I believe that government should mandate a livable wage for all working Americans,” he said, “rather than relying upon ‘the market’, which sometimes fails to address the growing economic inequality in our society.”

Wolf, a Democrat, has pushed for increasing the minimum wage since taking office in 2014. His latest $34.1 billion budget proposal suggests raising the minimum to $12 an hour, effective July 1, and then gradually increasing the wage by 50 cents an hour annually, until it reaches $15 in 2025.

The boost would affect 2.2 million people in the state, according to the Keystone Research Center, a research institute in Harrisburg.