How would a minimum wage hike affect businesses?

February 6, 2013 9:01:18 PM PST
Illinois Governor Pat Quinn called for a minimum wage increase to help working families.

Not everyone agrees that it would help. Some business owners and experts said it will actually worsen the unemployment problem and could lead to higher prices for customers.

At Pazzo's Italian Restaurant, which prides itself on its pasta dishes, the prospect of a minimum wage hike is giving owner Rocky Aiyash heartburn.

"Most guys are going to be put out of business because of it," Aiyash said.

According to Aiyash, a higher minimum wage would mean higher-earning staff would have to be paid more too. And it comes as the restaurant industry is finally rebounding from the recession.

"Business owners are going to be more concerned, start pulling in the reins a little bit, trying to tighten up their ships to absorb some of the expense of it. Ultimately the consumer is going to pay," he said.

Illinois' current minimum wage is $8.25 an hour, one dollar more than the amount mandated by the federal government. Supporters of the increase said that the state's high cost of living make the hike necessary.

The state's minimum wage was last raised in 2010.

Governor Pat Quinn said in his State of the State Address Wednesday that it should be raised to $10 an hour over four years.

"Nobody in Illinois should work 40 hours a week and live in poverty. That's a principle as old as the Bible," Quinn said.

Single mother Noemi Hernandez works in a restaurant while going to college.

She said a few extra dollars a week would help her raise her daughter.

"It would be able to just afford a little bit more, a toy probably or movies," Hernandez said. "Sometimes it's kind of hard to go to a store and have her ask me for something and for me not to be able to give it to her."

However St. Xavier University Dean Faisal Rahman said businesses aren't bluffing when they say higher wages could force layoffs.

"You can make a moral and ethical reasoning why we need to raise the minimum wage, but with the high unemployment among young people, the high unemployment among unskilled workers, certainly does not help the employment situation at all," Rahman said.