It’s been a little more than a month since Virginia increased its minimum wage, and while some workers are making more money, small business owners say it comes with a cost — and usually that is passed onto the consumer.
The hourly minimum wage in Virginia increased from the federally mandated minimum of $7.25 per hour to $9.50 per hour on May 1. The minimum wage will gradually increase to $11 on Jan. 1, 2022 and to $12 on Jan. 1, 2023, according to legislation passed last year. It could reach $15 per hour by 2026 if the General Assembly approves it.
At Elizabeth’s Early Learning Center at 2320 Bedford Ave., the only source of income is tuition, so when minimum wage went up, so did tuition, Executive Director Jane Gerdy said.
Although no teachers were at minimum wage, Gerdy said, raising the wages of lower-paid employees to the new minimum led to raising other employees’ wages as well, necessitating a tuition increase.
“It hasn’t had any consequences yet because there’s still a big demand for child care. I don’t think we’ve lost any enrollment because of that,” Gerdy said.
She said she feels bad about increasing tuition because of the effect it has on families but she said she didn’t have a choice. The tuition will rise again when the minimum wage rises to $11 next year. Gerdy said the tuition went up by $5 per week this year.
As a nonprofit, Gerdy said there aren’t large profits the day care center can dip into to cover additional costs.
“That all has to be passed on to families and child care is already very expensive,” she said.
Jenee Welsh, owner of Something Else Boutique inside River Ridge mall, said she has always paid more than the minimum wage to her employees, but not drastically more.
Most of them were making about $8.50 per hour and managers were making $10 or $12 per hour.
“Because it’s retail, my jobs are not meant to support a household,” she said. “These are jobs for high school kids, college kids or stay-at-home moms who just want something to do 20 hours a week.”
What many people don’t understand, she said, is that when the pay increases, so do payroll taxes.
“So the minimum wage may have gone up a couple dollars an hour but in all reality it’s going to end up costing me about four to five more dollars an hour,” she said. “Money doesn’t come from nowhere. It has to come from somewhere.”
That means there will be an increase in price for the product, an increase for when she orders from wholesalers who also are paying their employees more, so they have to charge Welsh more to make up for that increase.
She said when the minimum wage goes up next year, the cost will just be passed onto the customer.
“People can keep pushing and pushing and pushing for that but they’re going to pay for it,” she said. “So sure, you’re going to make more money, but the cost of everything is going to go up, so, in reality, you’re going to make the same amount of money as before.”
Additionally, she won’t be overlapping staff members anymore. On Saturdays, she typically had multiple employees working at a time but won’t be doing that now.
“So what’s going to happen is now people are going to be upset, which you’re already seeing it in the restaurant business. You’re seeing it at fast food restaurants. People are upset that they’re waiting longer. And that’s because supply and demand is not going to meet with how much it costs to staff,” she said.
Debbie Miller, owner of Bloom by Doyle’s, a florist, said she already was paying her employees above minimum wage because she knows how expensive it is to just put gas in their cars.
“I’m also a realist. I mean, I know that the more things go up, the more likely my delivery fee will have to go up or my flowers will; it is a trickle effect,” she said. “If wages continue to climb, money has to come from somewhere. Everything is touched by some worker. Shipping prices go up, not to mention labor wages on flower farms and processing of flowers and shipping them here. The reality is everything will go up, just to offset and maintain that whole flow.”
She said she doesn’t mind paying more to a great team player at the flower shop who goes above and beyond with customers and has a good attitude.
“I’m happy to pay more for that type of person,” she said.
Dave Henderson, owner of The Water Dog at 1016 Jefferson St., said the change hardly affected his staff at all since all already were paid above the minimum wage.
“People need to make a living wage and a living wage is different from minimum wage,” he said. “Minimum wage is what the federal government believes is the bare minimum that someone with like no kids can live off of and that’s just not true. Anything we can do to get you toward that living wage is fine with me.”
Henderson has taken payroll one step further and has begun a revenue-share program with his back of the house staff.
“We pay competitive rates but in addition to that we will be giving them a percentage of revenue that hits a certain threshold,” he said.
He said the new payment program will take place over the next pay period.