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Tue., Oct. 6
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Local business leaders fear unintended consequences of today’s minimum wage hike


With the New York state minimum wage increasing from $7.25 to $8 per hour today, local business owners are hopeful that it won’t hike up prices at the register as well.

“Naturally it’s going to have an effect on all small business,” Joseph M. Basta, owner of Basta’s Flowers and Gifts at 619 Main St., said. “When the minimum wage goes up so do many prices. It seems to be a vicious circle.”

Mr. Basta declined to comment specifically about how the hike will impact his employees, but echoed the concerns of other local business leaders.

Jake N. Jacobsen, who owns three Little Caesar’s Pizza Restaurants in the north country, including one at 637 State St., said roughly half of his employees will have their wages boosted because of the minimum wage hike. “They’ll be automatically moved right up.”

Although Mr. Jacobsen doesn’t expect to have to raise prices at his stores due to this round of wage increases, down the road it may become necessary.

The minimum wage in the state is set to jump to $8.75 by the end of 2014 and to $9 per hour in 2015.

“Eventually there may need to be a need to hike the costs,” Mr. Jacobsen said, though he stressed that it’s a long way down the road.

“I have no plans to raise the cost of my $5 pizza,” he said.

At Buster’s Sports Bar and Restaurant at 1130 Patterson St. owner Terry Vernsey said only five people will be affected by the increase.

The other 28 employees have “been here long enough that they were making more than minimum wage prior [to the increase] and they will be making more than minimum wage after,” Mr. Vernsey said. “We’re not raising prices because of it.”

But Mr. Vernsey too warned of the potential unintended consequences of the increase in minimum wage.

“I think it’s good that lower income people make more money,” he said, adding that “It’s not good if it causes businesses to raise prices.”

“If you raise all [business’] input costs, most of the time they’re going to pass that along to the customers,” Mr. Vernsey said. “We’re passing around more money but I don’t know if we’re benefiting from it.”

Mr. Vernsey added that the biggest factor in determining menu prices in the restaurant business is the cost of food, not labor.

But restaurants don’t control the price of the food they buy, Mr. Jacobsen said, leaving some with little choice but to go after the only costs they do have control over. “I can still control my labor [costs]; I may have to tighten my belt.”

The other side effect of the wage increase is that the entire pay scale at many businesses will be adjusted to reflect the new standard.

Mr. Jacobsen said the wage increases up and down the pay scale are necessary in order to ensure incentives for people to take positions with more responsibility remain.

“Eventually my managers will see raises also,” Mr. Jacobsen said, noting that their raises will likely come within the next several months.

Calls to Price Chopper, Save-A-Lot and Lowes requesting comment on the minimum wage increase were not returned.

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