Minimum wage hike seen as a negative by some business owners

Business experts say Thursday's federal minimum wage hike will have a negative effect on many of Onslow County's small businesses.

"This will hurt a lot of bottom lines," said Jim Reichardt, the Onslow County director of economic development. "This is an added cost generated by legislative means rather than production issues."

Small business employers struggling to make ends meet themselves said the 70-cent increase to $6.55 an hour places a heavier burden on them.

Rich Hinman owns and operates R&L's Treasure Chest, a small gift shop in Plumb Point Plaza on U.S. 17 across from New River Air Station, and R&L's Sports, a kiosk inside the Jacksonville Mall.

He said he currently has three employees working for him, each making minimum wage.

"As a small business owner, I don't get a paycheck," he said. "Every extra expense cuts into my pocket."

Hinman will be paying out close to $200 more dollars a month in payroll, he said.

"I work a full-time job and have this business on the side," he said. "Some of my employees work two jobs, but I can't afford to pay them more."

While retail business owners are dealing with shelling out extra bucks because of the wage hike, major businesses like McDonald's have long since left the minimum wage behind.

All the McDonald's in Onslow and Carteret counties already pay employees above minimum wage, said Beth Gargan, a spokeswoman for the restaurant chain.

"In order for us to be competitive and retain quality people, McDonald's has to pay more than the minimum," she said.

In fact, most North Carolina employers are moving away from the minimum wage, said Ralph Leeds, the manager of the N.C. Employment Security Commission in Jacksonville.

"The minimum wage law has been eclipsed by the law of supply and demand," Leeds said. "Generally speaking, employers that do not pay above minimum wage are no longer competitive in the labor market."

Leeds said employers that constantly have to train new employees because of a high turnover rate due to low pay are actually coming up short.

"When you train and then lose an employee because you are paying them minimum wage, it costs more in the end," he said.

Bob Latchey, a minimum wage employee at a local car wash company, said he is happy about the increase - but hedoesn't plan on making minimum wage much longer.

"My wife and I both work," he said. "This will get us a little more."

But given the current economy, Latchey will have to work more than half an hour to pay for each gallon of gas.

"Not happy about that," he said. "But I'm in school and hope to finish soon and then I will be making more money."

The increase amounts to about $800 a year for Latchey and other full-time employees who earn minimum wage. The spike will raise the pay of about 46,000 workers in North Carolina, according to an estimate from the federal Bureau of Labor Statistics.

The increase is the second step in a three-step process Congress enacted in 2007 to eventually increase the federal minimum wage to $7.25 per hour, said Neal O'Briant, a spokesman for the N.C. Department of Labor.

The third increase will take effect July 24, 2009.

Contact crime reporter Lindell Kay at lkay@freedomenc.com or 910-554-8534. Read Lindell's blog at http://onslowcrime.encblogs.com.