Small businesses could struggle with minimum wage hike
For nearly 60 years, Jarosch Bakery Inc. in Elk Grove Village has made cakes and pastries by employing local people.
While 54 of the more experienced workers earn a higher salary at the bakery, eight earn the current minimum wage of $8.25.
Owner Ken Jarosch worries if the minimum wage is increased, then all his employees may ask for raises to keep pace. The added labor expenses would be passed onto consumers, who may in turn buy fewer sweets. If the bakery grapples with escalating labor and administrative costs, it could reduce its hours of operation and cut its product lines.
Slashing hours would ultimately affect his youngest workers. "Closing early each night virtually eliminates the need for our high school aged employees," Jarosch said of the part-timers. "We would hire more mature help who don't have soccer practices, spring musicals, debate tournaments or cheerleading. Eliminating the employment of high schoolers would reduce our training time and costs."
Jarosch and many small businesses are awaiting the governor's decision on whether he'll sign new legislation that would increase the minimum wage to $15 per hour statewide. Jarosch dodged a bullet when Elk Grove Village officials opted out of the higher minimum wage ordinance approved by Cook County. That countywide law goes into effect July 1 at $10 per hour and will reach $13 by 2020.
Many suburbs have opted out of the Cook County ordinances. Suburban companies have appealed to their local chambers of commerce and village officials to opt out, including Bulldog Ale House. The pub sent a statement to Rolling Meadows officials about the "negative effects" it would have on its business.
The establishment said its labor costs could increase about 30 percent, which would force menu prices up. The restaurant has locations outside Cook County, including Carol Stream and New Lenox, which would operate on a different wage standard and accountability systems, making accounting more difficult.
For many businesses, the unskilled employees earning minimum wage are often high school students looking for their first jobs. "For $13 per hour, we expect competence, some skills, a good attitude and reliability," Jarosch said.
What industries thinkHere's what the increased minimum wage and sick days for workers could mean to various industries:
Many manufacturers already pay above the current minimum wage of $8.25 to attract higher skilled workers, said Richard Rutkowski, president of La Marche Manufacturing in Des Plaines. He is concerned about the costs involved with tracking the new ordinances, which could be thousands of dollars in additional expenses.
The Chicago-based Illinois Restaurant Association supported a minimum wage of $11, but feels the $13 approved by Cook County and Chicago is too high. The group would rather see the minimum wage increase statewide, instead of being implemented in a piecemeal fashion.
Tracking systems for a hike in wages, which are inconsistent from town to town, create extra costs, according to the Illinois Health and Hospital Association. Hospitals with offices in multiple locations will struggle with two sets of rules. More experienced workers who see the minimum go up will demand more. Hospitals' revenues likely will not increase to cover the cost, since they depend on set reimbursements from health insurers, Medicaid and Medicare.
Some retailers may struggle to stay open, and workers may see hours cut, so there isn't a net benefit, according to the Illinois Retail Merchants Association. A higher minimum wage will increase labor costs about 20 percent in the retail industry, experts say.