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The increase in the District’s minimum wage earlier this month appears to have workers in the city pleased because it puts more money in their pockets but makes some entrepreneurs nervous because the bump in pay cuts into their budgets.
“I actually make more than $16.10 an hour but it is good that the minimum wage has gone up,” said Tasha Elliott, an employee of a national retail chain outlet located in Ward 7 in Northeast. “With the prices of everything going up, people will have more money to make ends meet.”
As Elliott alluded to, the city’s minimum wage jumped to $16.10 from $15.50 for non-tipped workers and for tipped workers sits at $5.35. D.C. Mayor Muriel Bowser made the announcement of the increase on July 1. The mayor revealed her administration’s compliance with the Fair Shot Minimum Wage Amendment of 2016 which mandates increases in the pay scale tied to the Consumer Price Index.
Pros and Cons of Minimum Wage Increase
Clarence Jackson co-owns several IHOP franchises in Congress Heights in Ward 8 and Columbia Heights in Ward 1.
He said while raising the minimum wage will be good for workers, it could be a problem for business owners.
“When you raise wages, there has to be a cut somewhere,” Jackson said. “In my case, you have to deal with overhead, cost of the food and things like that. It’s going to be a pain for my business and my employees.”
Linda M. Greene owns Anacostia Organics, a Ward 8 store selling marijuana products, particularly for medical uses. Greene said the minimum wage increase doesn’t affect her business.
“My employees are paid far beyond the minimum wage,” Greene said. “To me, dealing with the raise in the minimum wage and cutting into operations cost is not an issue. I offer my employees salaries and benefits such as paid vacation and health insurance. However, my business is so different.”
Greene said because marijuana products continue to be stringently regulated in the District and as she doesn’t have access to traditional forms of financing a business because the drug remains illegal on the federal level, she said benefits that are offered aren’t deductible as far as taxes are concerned.
However, not all entrepreneurs admit to ambivalence about the minimum wage’s rise.
“We’re happy about it,” said Sage Ali, a co-owner of the Ben’s Chili Bowl company based in Northwest. “We take care of our people. We realize that our expenses are going to go up but we will deal with it in order to help our people.”
Ali said the minimum wage increase affects front line employees but general managers at the individual restaurants have fixed salaries.
David Cooper, the director of Economic Analysis and Research Network at the Economic Policy Institute (EPI), said the $16.10 minimum wage has emerged as the highest in the country for a state-level jurisdiction.
“But D.C. has a high cost of living,” he said, “that offsets the wage increase.”
He said according to data compiled by the EPI, a single person living in the District would have to make $52,000 to live comfortably. He said that translates into $25 an hour in terms of a wage.
Cooper said the company should be obligated to close the gap between tips and hourly wage to reach the minimum wage.
Elliott understands the arguments entrepreneurs continue to make in that increases in wages may result in the rise in prices of services and products and cuts in other parts of the operation. Nevertheless, she said a rising wage comes out good for everyone.
“There’s something about seeing more money in your paycheck, whether it is an increase in the minimum wage or by the employer’s choice,” Elliott said. “Giving workers more money makes them feel valued and important.”