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Northwest Salmon

 

NEWS

Statewide minimum wage increase affects area businesses

by Amanda Fanger
reporter@reporterandfarmer.com

Last fall when South Dakota residents voted to raise the minimum wage to $8.50 an hour, several local business owners had to rethink the way they look at hiring.

Those most affected by the vote were teenagers.

That’s why many business owners are interested in a new proposed law South Dakota legislators were working to pass last week.

Senate Bill 177 is an amendment for the minimum wage regulation that allows employers to pay workers under the age of 18 years $7.50 an hour.

“The thing is, I had no problem with an increase in wage for adults; they deserve at least that,” said Webster’s A&W owner Benita Baus. “When the kids got the same pay raise, it took away from the other employees.”

Over half of Baus’ staff are under the age of 18. With 11 minors employed by her, she says the new wage increase law was going to cause her to rethink her hiring process.

“I couldn’t afford to hire kids,” she stated.

Although A&W’s pay scale was already above minimum wage for her youth workers she added, “I can’t afford to train at $8.50 an hour.”

While employers are allowed to hire a youth at $4.25 an hour for the first 90 days, called a training wage, Baus says the people-voted law takes away her flexibility as a business owner with a pay scale for those youth who need more than three months of training.

“Some kids pick it up right away and others take a bit more time. It depends on the individual. (Generally) the younger the kid, the less socializing they’ve had and the more timid they are. That makes it harder,” she said. “An adult has been out in the world, they know some things... It’s nothing against kids, they’re just young yet and need to get more experience.”

And the $8.50 an hour law makes it harder for businesses to give kids that experience.

Jay Pereboom, owner of Pereboom’s Café in Webster says he was “very excited” when he heard about the proposed $7.50 an hour law because, “it keeps wage in proportion.”
In his business, roughly half of his employees are underage.

“We weren’t going to hire too many dishwashers at $8.50 an hour,” he said. “This gives us more flexibility to train. We wouldn’t have been hiring too many 14-year olds. We would most likely have passed over the 14-year-old for the 16-year-old (applicant). We couldn’t have been quite so tolerant of those young kids.”

Pereboom likes that the proposed law is more business-friendly. Without it, he said he was forced to pass some of the expense onto the consumer and work with shorter shifts for employees.

The new law will allow for more job opportunities for teenagers, he thinks. “This is a way for kids to get their foot in the door.”

Webster’s Subway owner Susan Jirava says she doesn’t yet know exactly how the pay increase will affect their bottom line. Although they usually have more underage employees, there are currently only a couple under 18.

However, she did express some frustration towards the idea that the South Dakota legislature is already making changes to a law that was voted on by the people such a short time ago.

“I can’t understand how they can roll it back after (the law has) been set. What’s the rationale for that and why didn’t they think of (the youth workers) when it was put on the ballot?” she said.

Typically, all her high school employees are hired at the minimum wage after the 90 day training period. Even if SB177 passes, she has no intention of lowering her current employees’ pay level, but said she’ll likely consider bringing on new hires at $7.50 an hour.

When the $8.50 an hour law went into effect, she says it affected everyone, not just the youth workers.

Baus agreed, saying, “There are adults here who need to be making that money so they can pay their bills. (The kids are) maybe saving for college, but otherwise it’s for (pleasure purchases). Adults deserve to earn more.”

She went on by adding, “If a businesses’ adult employees weren’t making minimum wage before this, it’s a shame on that business. They should have been making more than $7.25 an hour.”

Pereboom has heard of other business owners receiving criticism. “This one guy... was saying, ‘maybe if you didn’t drive a $50,000 vehicle you could afford to pay your employees more.’ It’s just ironic how people can twist things around,” he said.

Colin Bronson, part owner of Bitter Lake Lodge south of Waubay agrees. Although they don’t currently employ any underage workers, he says the recent minimum wage increase mandate has had an effect on Bitter Lake Lodge’s bottom line.

“We’ve got to follow the state guidelines,” he said. “This will affect any small business’ bottom line.”

Eventually, it will get to a point where a business has no other options but to put some of the expense off onto the customer through increasing prices for their services, Bronson says.

“To stay profitable, it’s something you have to do,” he said.

Baus, who considers her employees family, wishes she could afford to pay them more than she does now.

“Everyone is worth more. If I could pay people $15 an hour, I would,” she said. “But it’s part of running a business. You’ve got to make ends meet.”

While Pereboom says he has no plan of dropping his current underage employees back down to the $7.50 an hour rate if SB177 passes the house, he will consider taking on new underage employees at that rate, allowing him room to reward them with better pay later on if their performance merits it.

“This law gives businesses more opportunities to be fully staffed versus running light on the shifts,” he said.

Fiksdal Funeral Home

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