Iowa City officials, business owners react to possible minimum wage increase
University of Iowa students and other workers across the country may see an increase in the minimum wage — President Obama has suggested to raise it from $7.25 to $9. However, some believe the proposed increase would have unintended consequences for local businesses.
“The immediate [effect] would be I would have to get more productivity out of our workers,” said Jim Rinella, the owner of the Airliner, 22 S. Clinton St. “Things may sound politically popular, but they’re very destabilizing.”
Rinella said while costs will not be passed on to customers because of the competitive market, he believes an increase would make him implement a more selective hiring process.
“[The minimum wage] isn’t a big hurdle, but $9 would be a significant increase overnight,” he said. “You’ve just raised the hurdle to try out a worker and made it harder to give people a chance.”
Hans Isakson, an economics professor at the University of Northern Iowa, said he thinks an increase in the minimum wage would mean a “definite” increase in unemployment for low-skilled workers.
“There is no question it will increase unemployment by reducing the number of jobs available particularly to unskilled workers,” he said. “The problem is people who can’t make ends meet because wages are so low, but there are better ways to deal with it than minimum-wage laws.”
The possibility of an increase resurfaced during Obama’s State of the Union speech last week. Currently, the wage stands at $7.25 an hour, but proponents of the increase believe it will help people who struggle to stay above poverty level.
“A minimum wage increase is needed — we have thousands of families living on income from current minimum wage; it’s not something to raise a family, and it’s not enough survive in Iowa,” said Sen. Joe Bolkcom, D-Iowa City.
One University of Iowa political expert said the increase “is probably not going to happen,” but Obama is using various proposals —including minimum wage — to cast House Republicans in a bad light.
“Obama still seems to be in campaign mode,” said Tim Hagle, an associate professor of political science. “He is finding ways to diminish or embarrass the Republicans, because they’re seen as the party of ‘no.’ Democrats might retake the House in 2014 or at least it will put political pressure on them.”
One Democratic official stressed that the current situation with a low minimum wage affects more people than just the average wage earner.
“… When you’re paying them minimum wage, it puts stresses on social-services programs to try to pick up needs not being met,” said Terry Dahms, the head of the Johnson County Democrats. “There is still a net cost to society when you’re paying minimum wage.”
Deborah Thornton, the head of the Johnson County Republicans, said an increase in the minimum wage would just be an “inflation driver,” which would ultimately hurt everyone, including low wage earners.
“The minimum wage allows people to get into the workforce,” she said. “[An increase] makes it more difficult to hire entry-level people, more difficult for high school and college students, and it’s not going to help anybody.”
Another local business owner said while he already pays employees over the minimum wage, an increase would force him to consider “bumping” their salary and re-examining the other costs associated with the business.
“We would have to look at cutting advertising as well as all of our expenses,” said Terry Dickens, a co-owner of Herteen and Stocker, 101 S. Dubuque St.
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