Rochester Democrat and Chronicle, December 8, 2004, Wednesday

Copyright 2004 Rochester Democrat and Chronicle
All Rights Reserved
Rochester Democrat and Chronicle

December 8, 2004 Wednesday Metro Edition

SECTION: NATIONAL; Pg. 1A

HEADLINE: Joy, wariness greet new minimum wage

BYLINE: Joy Davia, JDAVIA@DemocratandChronicle.com

BODY:
Workers welcome the extra income but some area businesses fear payroll hardships ahead
Joy Davia
Staff Writer
Waitress Debbie Knapp is both excited and worried about the state's newly passed minimum-wage increase.
She's excited because she needs the extra money, especially since her recently laid off fiance just landed a job with a much smaller salary. But she is worried that her employer - Patricia Hall of Pat's Coffee Mug - can't handle another financial hit.
Fewer customers are eating at the restaurant, so business is hurting. In the last few years, one neighboring business closed and another laid off workers. Participants in a nearby ARC program have also stopped frequenting the South Clinton Avenue restaurant after losing their stipends because of funding cuts, she added.
"I know she can't afford it," said Knapp, gesturing toward Hall, who was working in the kitchen, "especially because business is so slow. I just feel bad."
Local workers and businesses had similar mixed reactions Tuesday to the state Senate's override a day earlier of Gov. George Pataki's wage increase veto. The Assembly already overrode the veto in August. So the state's minimum wage will jump from $5.15 an hour to $6 in January, to $6.75 in 2006 and to $7.15 by 2007.
Some agreed that the increase would provide a more livable wage for about 28,300 workers in Monroe County who are paid between $5.15 and $6.99 an hour. It might also allow such workers - who include waitresses, dishwashers and day care workers - to spend more money and bolster the local economy.
A ripple effect?
But others painted a bleaker scenario. How can companies - especially smaller businesses - absorb another jump in overhead costs, especially in a stagnant economy? Businesses will have to raise prices and perhaps cut staff. Workers paid just above the minimum wage will probably expect a similar pay jump, said area business owners.
Still, Toni Prutzman, a waitress at South Wedge Diner and a single mother who lives with her 5-year-old son, Tyler, in Irondequoit, said the wage jump is welcome relief. She makes close to $4 an hour - which is more than tip workers' minimum hourly rate of $3.30 - but said it's hard to pay bills because the amount she takes in from tips fluctuates.
In July, for example, her tips unexpectedly dropped by about $100 to $150 a week. She couldn't pay her rent, so her landlord let her make it up a month later.
Prutzman's boss, owner Tam Tran, scanned a newspaper report on the wage increase, which for tip workers would climb to $3.85 in 2005, $4.35 in 2006 and $4.60 in 2007 for tip workers. "I can handle that," he said.
But other business owners weren't so sure.
Romold Inc. President Lou Romano said the wage increase was another rising cost that might prompt him to explore options such as relocating out of New York state.
He ticked off a list of his growing expenses: workers' compensation, utility costs, lease payments.
His full-time workers are paid at least $8 an hour, "but invariably, in some way, shape or form, we'll probably have to follow suit with our other workers and keep the proportions the same," said Romano, whose Gates firm designs and manufacturers plastic injection molds.
Other states did OK
But their fears might be unfounded. Businesses in other states were not greatly hurt by higher minimum-wage rates, said Ronald G. Ehrenberg, Cornell University's Irving M. Ides labor professor.
"There was some increase for people down at the bottom of the scale but the ripple effect was not that large. Especially because they're going to increase salaries of the other people over time, anyway," he said.
Pataki said he vetoed the wage increase because he feared New York might lose jobs to neighboring states such as Pennsylvania and New Jersey who are still at the $5.15 federal minimum. (Massachusetts and Connecticut have higher minimum wages.) He also said he believed the federal government should set the minimum wage rate so all states would be on equal footing.
Business owners say they don't begrudge their workers a chance to earn more money.
"We pay our workers at least $8 an hour and they can barely survive on that," said Nel Adams, vice president of Jeff's Books in Midtown Plaza, who might have to increase pay for workers making a bit over the minimum rate.
The minimum wage has not kept up with inflation. If the state 1968 minimum wage of $1.50 were adjusted for inflation, it would have been worth $8.72 in 2003, according to a March 2004 report by the New York state Assembly.
But some business owners are very worried about how to manage the extra cost.
For Hall of Pat's Coffee Mug, it might just mean selling her business of 12 years before her lease expires in September.
"I keep on handing out more than I take home," she said. "And the (minimum wage) increase is just one more thing that will add to that."

GRAPHIC: Waitress Toni Prutzman, at work at the South Wedge Diner, makes about $4 an hour, so the rise in the minimum wage is welcome. But she will still find it hard to pay bills because she depends on fluctuating tips. CARLOS ORTIZ staff photographer; Top minimum wages; New York will raise the minimum wage to $7.15 an hour by 2007, joining other states with rates above the federal minimum. Federal minimum wage: $5.15 Chart is not available. * Indexes the minimum wage to account for annual increases in the cost of living. ** Vermont's and Illinois' minimum wages will increase to $7 and $6.50, respectively, on Jan. 1, 2005. SOURCE: Fiscal Policy Institute; KEVIN M. SMITH staff artist