Small Business Owners Face Pressures Of Minimum Wage Bumps In Big Cities

Minimum wages are on their way to $15 an hour in New York and California. Workers look forward to the bump. But some small businesses are bracing for a hit to their bottom line.

RACHEL MARTIN, HOST:

It's time now for our series Hanging On, where we take a look at the economic pressures of American life. This week, we're looking at the minimum wage because it's on its way up to $15 an hour in California and New York, which is an unprecedented wage bump at the state level. And it's going to have an effect both on workers and employers. NPR's Hansi Lo Wang has more.

HANSI LO WANG, BYLINE: Shopping these days is a little easier on Edica Reese's wallet. She works as a cashier at a McDonald's in New York City, where the minimum wage is on the rise.

EDICA REESE: It's helping. I guess I can get more essentials. Before, I couldn't get what I needed.

WANG: Sometimes she would have to ask neighbors for toilet paper when she ran out. But now she and other fast-food workers in the city are making at least 10.50 an hour. That's set to go up to $12 an hour at the end of the year.

(SOUNDBITE OF CASH REGISTER BEEPING)

WANG: And that means she can afford to keep up her own stock of toiletries.

Are you finished shopping?

REESE: Yes, I am.

WANG: But it's going to be a while before the minimum wage finally hits the planned $15 an hour. That's because the wage hikes in New York state and California are being phased in with small bumps every year. Reese says 15 an hour would make a big difference for her and her 3-year-old daughter.

REESE: I guess I could pay my bills on time instead of waiting for the next check to come and the next check. I live check to check still. I need to save a little bit more money, you know?

WANG: For a full-time worker, a year's salary at 15 an hour, before taxes, adds up to just over $31,000. And some employers say they're not sure how they're going to afford it, including Kurt Samuels. He owns Family's Pots and Grill, a Jamaican restaurant in Mount Vernon, N.Y., where, at 5:30 in the morning, he starts making...

KURT SAMUELS: Brown stew chicken, curry goat, oxtail, and soon I'll have some jerk chicken ready.

WANG: This is all for the lunch rush?

SAMUELS: For the lunch rush.

WANG: Samuels has one part-time employee who helps take orders. She's currently making the minimum wage, and he says when it goes up...

SAMUELS: It's going to be hard, you know? Maybe her hours most likely going to be cut, you know, 'cause the end of the day, got to pay the rent, pay the bills, the gas, light, insurance.

WANG: He recently raised prices, but he's worried about losing customers if he does it again.

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WANG: A few blocks away, Miesha Stokley is trying to figure out how to keep staffing her cupcake shop. She has one minimum-wage worker who helps with baking.

MIESHA STOKLEY: She's definitely worth minimum wage, so I can't argue with that. I just have to, you know, work harder so we can make more money and I'll be able to pay. But I don't argue with it because it's expensive to live in New York.

WANG: For now, Stokley's putting more hours in herself at Cupcake Cutie Boutique.

STOKLEY: I work nights as a nurse. So I'm here in the morning and the afternoon, and then I go to work at night.

WANG: So when do you sleep?

STOKLEY: I barely sleep (laughter).

WANG: It's part of the pressure many other small-business owners are facing in cities, including Seattle and Washington, D.C., where the minimum wage is also rising to $15 an hour. But lawmakers and economists are paying extra attention to the wage bumps in New York state and California.

LINDA BARRINGTON: For most economists, this is untrodden territory.

WANG: Linda Barrington heads Cornell University's Institute for Compensation Studies. She says it's hard to predict how raising the minimum wage at the state level will impact New York and California's economies. That's because past studies have not looked at increases this big and that affect this many people. Besides workers and employers, though, she says we should keep an eye on how these wage hikes will affect prices.

BARRINGTON: The more that businesses can pass it along to consumers, the less it's going to negatively affect employment.

WANG: Those consumers, of course, include minimum-wage workers. That's partly why some critics of minimum-wage hikes say increases are not effective tools for reducing income inequality. Still, Barrington adds, any increase will touch not only fast-food chains and other large-scale industries but also those on the smaller scale, like families hiring a home health care worker.

For Edica Reese's family, though, it's a change that can't come soon enough. She lives in a public housing development in Harlem, where she pays $300 a month for a small studio apartment she shares with her daughter, Kayleene.

REESE: And you like the fight for 15, right?

KAYLEENE: Uh-huh.

WANG: Kayleene went to rallies with her mother, where she and other fast-food workers protested for minimum wage increases.

REESE: What do you say?

KAYLEENE: What do you want? Fifteen. When do you want it? Now. We don't get it, shut it down.

REESE: Yay.

UNIDENTIFIED WOMAN: Yay.

WANG: Workers in Arizona, Colorado, Maine and Washington are also calling to raise their state's minimum wages, though to a few dollars shy of 15. Those hikes will be on the ballot on November 8.

Hansi Lo Wang, NPR News, New York.

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