Small Business Owners Struggle to Afford Minimum Wage Increase

Minimum wage jumps from $6.55 to $7.25 and though the 70 cents doesn't sound like much, WFMY News 2's Tracey McCain found employees who say they'll take every little bit they can.

But that's just the up-side to the increase. Some small business owners say the pay raise only makes it more difficult to survive the economy.

John Hiatt, Jr. and his wife are part of the three man crew at Remember When Records on High Point Road. Bart Trotman is their only employee.

He's only spent two weeks on the job and thanks to the minimum wage increase, he's already getting a raise.

"I guess i picked the right time to start working here," laughed Trotman. But his boss isn't exactly thrilled.

"It works against you," said Hiatt. "I don't know what you can do about it other than not have any employees. And actually the last time when we went $6.50 we gave up our employees. People don't realize it but that's what businesses have to do to stay in businesses sometimes," he added.

"It's good for me," said Trotman. "It's unfortunate that it's not good for him but I could definitely use the extra help so I'm fine with it."

Hiatt remembers paying his former minimum wage employees $3.00 more than twenty years ago. He says his struggling small business may now suffer even more.

"It's two sides; it's good for the employee. But unless you can increase your prices or you have a way of recouping it, it comes out of your pocket," said Hiatt.

But for Trotman the increase comes at at time when the slumping economy took its toll.

"As a worker, working for $6.50 at times definitely seems like it's not enough so to me it feels long overdue," he said.

A person working full time who earns $7.25 an hour now averages a yearly income of $14,500. That's a $1,400 pay raise. But over each paycheck it averages to about $28.

Dr. David Ribar, a UNCG Professor and Economist tells WFMY News 2 the new minimum wage salary is still considerably below the poverty level for a three person family. In order for people to see a considerable difference in their pay and afford to live comfortably, the Federal Government would have to raise the minimum wage to between $9 and $11.

Though analysts with the NC Justice center says when the minimum wage increases so will the state's economic outlook.

Analyst Lousia Warren says the increase will raise the pay of the lowest-paid workers and, as a result, boost the economy.