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Iowa City managers say $10 minimum wage would be bad business

BY BRYCE VISSER | FEBRUARY 22, 2012 6:30 AM

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An Iowa Senate bill raising minimum wage by $2.25 over the next year has some Republican legislators and business owners concerned about future employment prospects — including those for students.

The bill would see Iowa's minimum wage increase this summer from its current rate of $7.25 per hour to $8.75 per hour and further to $10 by 2013.

"This is basically a 'message bill,' " said Sen. Bob Dvorsky, D-Coralville, who noted that he doesn't believe the bill will pass in the Republican-controlled House. "We're just trying to get the message out that it does cost about $10 an hour to live anywhere in Iowa in a sustainable fashion."

However, Tom Lenoch, owner of the Library, 113 E. College St., noted raising the minimum wage might put a crunch on small-business owners.

"I estimate I'm going to have to increase my payroll by about $200 a day," he said. "It's going to make me look for more qualified candidates, employees who are worth $10 an hour."

Lenoch said he might have to reduce hours for his employees to make up for increased minimum wages.

"I'll still have to employ the same number of workers, but I might have to become creative with my scheduling, like starting my employees at 11 [a.m.] instead of 10 [a.m.]," he said.

Sen. Sandy Greiner, R-Keota, also noted many employers in her district said they would hire more experienced personnel — and therefore fewer students — to ensure they're getting their money's worth for the increased wages.

"If this goes through, they don't feel they can hire as many young people and pay them $10 an hour when they're training," she said.

Greiner, who represents some of Johnson County southwest of Iowa City and Coralville, noted the large number of students in her district who might not be able to find a job if employers cut down on new hires.

"I know how devastating it would be for high-school students who cannot find an after-school job or youth who can't find work over the summer," she said. "Without jobs, they might have to re-evaluate their education prospects."

Dvorsky noted this would be the first increase of the state's minimum wage since 2008, when the wage was raised from $5.15 an hour to its current rate.

"Back then, companies all over the state were protesting the minimum wage hike and threatening to move out," said Danny Homan, the president of the American Federation of State, Municipal, and County Employees Iowa Council 61. "It turns out none of them left."

Homan said "a disturbing number of Iowans have to work numerous jobs just to make ends meet."

"Why do the companies believe students can be paid a substandard rate for their work?" Homan asked. "It's deplorable that they're more interested in their bottom line than in paying what their employees are due."

John Solow, a UI associate professor of economics, noted Greiner's concerns were valid and historically, raising the minimum wage has made firms more cautious about hiring on new employees in the minimum-wage bracket.

Yet if minimum wages had to be raised, he said, now would be ideal.

"We're coming out of a recession, and businesses are beginning to expand and hire new employees," he said. "We're seeing unemployment rates dropping, and while they're not where we'd like them to be, we're in a far better condition to raise minimum wages then we were a year ago."


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