Small businesses in US brace for wage increase

CINCINNATI: Economists and politicians may disagree about the economic impact of a looming increase in the US minimum wage, but Ohio restaurateur Dean Gregory already knows how much it will cost him. 

“We've already figured out it's going to cost us between US$125,000 (RM444,200) and US$150,000 (RM533,000) a year. I'll have to raise my prices, definitely,” Gregory said. 

Perched above the Ohio River in downtown Cincinnati, Gregory's Montgomery Inn at the Boathouse is the busiest independent restaurant in Ohio, serving hundreds of plates of its famous barbecued pork ribs a day. 

The second-generation family eatery is one of many small businesses in America braced for a higher minimum wage. 

In mid-term elections in November, voters in Ohio and five other states approved increases in base pay in their states, and Democrats have pledged to use their new control of Congress to raise the federal minimum wage to US$7.25 (RM25.76) an hour over two years from the current US$5.15 (RM18.30), the first increase in a decade. 

Some 14 million workers, or 10% of the US workforce currently making less than US$7.25 an hour would see pay increases from the move. 

America's low 4.5% unemployment rate means few employers actually pay minimum wage any more – even McDonald's Corp – typically starts workers above US$6 (RM21.32). But restaurants who rely on tipped workers and small businesses who hire teenagers for part-time or summer work say the raise will hurt. 

In Ohio, the wage is set to climb to US$6.85 (RM24.34) from US$5.15 on Jan 1. The minimum for workers who collect tips will increase to US$3.43 (RM12.19) from US$2.13 (RM7.57). 

At The Boathouse, dishwashers, cooks and busboys already earn more than US$5.15 – “Nobody will work for minimum wage,” Gregory says. But waiters and waitresses get US$2.13 (RM7.57) an hour, plus tips. 

With tips, a good server can make up to US$50,000 (RM177,700) a year, said Jeff Ruby, owner of the high-end Jeff Ruby's steakhouses in Indiana, Kentucky and Ohio. – Reuters  

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