Business

Some bemoan hike in wages; state minimum goes up to $8 an hour July 1

Rebecca Watkins is getting a raise, and that's fine with her.

"That's cool," said the employee of Pizza World in Granite City. "I do need it."

Co-worker and day manager Theresa Godwin already makes more than minimum wage and also believes that she should be in line for the quarter-an-hour raise that will soon increase the state's minimum wage from $7.75 to $8 an hour.

"I think that people already making more than minimum wage should get that quarter," Godwin said. "People like me, I think, get ripped off when the minimum wage goes up. I still get the same pay, and everybody else gets a raise."

Her boss, Eric Wortham, said he is more than happy to pay his employees as well as he can but believes that in the long run, the rate increase often is passed on to the consumer and can hurt business and ultimately those working for minimum wage.

"I don't think it does the kids any good," Wortham said. "It looks good for political reasons. Increasing the minimum wage sounds great, but the same kids they're trying to help, they are actually hurting."

He and other Illinois employers are about to be subjected July 1 to the second of three annual minimum wage hikes. On July 1, 2010, another scheduled 25-cent increase will push up the state's minimum wage to $8.25 an hour.

Although he did not increase his prices after last year's wage increase, Wortham said he will have to do it this time around.

"It affected my bottom line," he said. "This time, I will have to take a small increase. I may have to go up 10 percent across the board in product, but that may be lower than what other national pizza restaurants will have to do."

Wortham also said that the series of wage hikes that recently ousted Gov. Rod Blagojevich pushed and then signed into law in November 2006 is a political ploy to drive up state tax receipts.

"When they increase the prices, more sales tax revenue will go to government establishments," he said. "It's a tax increase on the middle class."

However, the nation's largest federation of unions agrees that the series of pay increases was needed. The AFL-CIO in Springfield was right behind the effort three years ago, and spokeswoman Beth Spencer said the issue is a top priority and one of the organization's core issues.

"Minimum wage workers are more likely to put money back into the economy," Spencer said. "They will spend every penny they make, and that's essential. We feel Illinois workers need to be paid a fair and decent wage."

Illinois already leads most states in minimum wage rates. According to statistics from the U.S. Department of Labor, only California, Connecticut, Massachusetts, Vermont, Oregon and Washington state have higher minimum wages. These six states pay $8 or more in minimum wages, with Washington's $8.55 an hour rate being the highest.

Twenty-seven states, including Illinois, have laws that call for the minimum wage to be higher than the federal standard, which is $6.55 an hour. Twelve states pay the federal rate, and five have no minimum-wage requirement.

The Illinois Chamber of Commerce has led the opposition to the minimum wage increase in the Land of Lincoln. Chamber president and chief executive officer Doug Whitley said the state's minimum wage raise is detrimental to small businesses and drives business away.

"I think it has some negative connotation for the cost of doing business in the state," Whitley said. "I think that sends a signal to employers that the cost of doing business in our state is higher versus the cost of doing business in other states."

The National Federation of Independent Businesses also has historically opposed minimum wage increases. Assistant Illinois Director Mark Grant agrees that this puts Illinois businesses at a competitive disadvantage.

For example, the minimum wage in Missouri is $7.05.

The federation also believes the more government is involved in the way business is conducted, the less effective businesses will be, he said.

"As government sets all sorts of regulations and standards, it makes it more and more harder for smaller employers with a handful of employees," Grant said. "It makes it harder to compete and stay in business. They don't have the economy of scale that large companies have. When you increase the cost of minimum wage for people that work for them, or any other cost or regulations they have to deal with, it will end up costing business."

Wortham opened his first pizzeria 18 years ago in Maplewood, Mo., and has since opened 14 more in four states. He has 300 employees throughout his chain, which includes five metro-east restaurants. This week, the Granite City native will open his second Pizza World in Pennsylvania, where the minimum wage will be raised next month to $7.25 an hour.

"The consumer will end up paying for it," Wortham said. "The only people gaining from this is the government. That's really what it is."

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