Small businesses react to minimum wage hike proposal - Hawaii News Now - KGMB and KHNL

Small businesses react to minimum wage hike proposal

HONOLULU (HawaiiNewsNow) -

Workers at McKinley Car Wash start at $7.25 an hour. Governor Neil Abercrombie's proposal to raise the minimum wage would increase their pay to $8.75 an hour.

Each employee works about 50 hours a week.

Owner Yukio Yoshikawa said increasing the minimum wage would increase all of his labor costs.

"No exceptions," he said.

Jack Schneider, who owns JS Services said the proposed increase only accounts for wages and overlooks other costs.

"There's an immediate increase to the employer of roughly 20 percent in salary," he said. "On top of that you have roughly 20 percent in mandated benefits: there's FICA, there's Medicare, there's worker's comp, there's TDI."

Eggs 'n Things general manager Mike Skedeleski said it would be less painful to boost the minimum wage in stages.

"Maybe in year one it's five, ten percent. I think hitting everybody at once would be a little rough for a lot of companies," he said.

Hawaii's starting hourly wage has been the same for six years. Yoshikawa said an increase is inevitable.

"If it's good for the boys, I don't want to be against it," he said.

In his State of the State address Tuesday, Abercrombie said he believes his $1.50 increase will trigger spending.

"Minimum wage earners provide immediate infusion of the dollars into the economy," he said.

"I see his reasoning," Schneider said. "But that's the reasoning of somebody who has never been in business, and somebody who's never done a payroll."

He thinks a minimum wage increase could keep company's from hiring more workers, and could cause employers to cut hours to lessen the impact.

"If the wage goes up, people have to come down," he said.

Yoshikawa said if the minimum wage rises, so will wages of workers who make more than the minimum.

"You have to be fair to everybody, right?" he said.

The governor wants the minimum wage increase to take effect next January.

Copyright 2012 Hawaii News Now. All rights reserved

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