Industry Addresses Minimum Wage Hikes

Industry Addresses Minimum Wage Hikes
President Obama

NEW YORK — The minimum wage debate is a complicated one, and footwear businesses in states where hikes have already passed are trying to adjust.

While Congress has not yet acted on the issue of raising the minimum wage to $10.10 an hour, President Barack Obama has called for state-by-state hikes. Delaware, Connecticut, West Virginia, Massachusetts and, as of last week, Maryland have already made moves, to varying degrees.

“One size for [raised wage] policy certainly does not fit all,” said Matt Priest, president of the Footwear Distributors & Retailers of America. “The same goes for business owners who are confronting their budgets for employees. It ultimately depends on where people are with their business.”

Joe Gradia, co-owner of Hawley Lane Shoes, said that for his store’s four Connecticut locations, running a tight ship is vital to preventing possible minimum wage fallout. Hawley Lane and its employees are mostly unaffected by hikes — according to Gradia, an average employee who works a regular schedule and doesn’t make commission earns $11 an hour.

“When you go through tough economic times, bad weather or unemployment, two things must be kept in line: inventory and payroll,” Gradia said. “It’s the only way you can survive. If employees feel they’re taken care of and business is in line, it’s not an issue.”

Gradia added that further raises both boost morale and incentivize employees to work harder.

Most states are seeing a gradual rollout in terms of actual increases. For example, Maryland’s living wage is now $7.25 an hour; by next summer, it will rise to $8.25, ultimately going up to $10.10 by 2018.

Kelley Heuisler, owner of Baltimore’s Poppy & Stella shoe store, wasted little time adapting. As soon as the minimum wage debate sparked headlines, Heuisler boosted her starting salaries to $11.25 from $10.

“The news really opened my eyes to how low wages in Maryland are,” she said, adding that increased costs for her business already have been absorbed. “As a small business owner, employee costs are high and payroll is one of my largest expenses. I’m more than willing to pay that to keep quality employees.”

But for Emilie Yarid Couch, the potential impact of minimum wage hikes could cause small businesses to lose workers. The co-owner of Yarid’s, a chain with three locations in West Virginia, one in Colorado and one in Virginia, said that while she’s not worried about her stores being able to break even, others could be less fortunate.

“If you’re a smaller retailer, you always have to look at the bottom line,” Couch said. “If increased wages force owners to reduce staff, which likely will happen for some, then businesses will face the problem of an overworked, smaller workforce. Then the raise in pay won’t even be a good thing.”

Cheri Swenson, owner of In2Soles of Rehoboth Beach, Del., said pay actually makes little difference for her employees’ performance, though they have always earned above the state’s minimum wage. She added that her store is a seasonal business, so overall payroll costs remain relatively low. “We’re a mom-and-pop store,” Swenson said. “I come from a generation where you work hard no matter what, which sets the tone for workers. My employees probably aren’t looking to get another dollar in the next 15 years.”

In states like New York, the road to $10.10 seems to be a longer one. Last year, the state approved increases to $9 an hour, but that change won’t take effect until 2015. Wages are currently $8 an hour, up from the longtime $7.25 standard.

Danny Wasserman, owner of Tip Top Shoes in New York, said a higher minimum wage could have a positive impact on consumer spending habits. “All our employees are above the new wage,” Wasserman said. “But customers may be getting paid more in general and will have more disposable income.”

Time will tell how minimum wage ultimately affects the footwear industry as a whole, though. Steve Lamar, EVP of the American Apparel & Footwear Association, has heard a number of concerns regarding the minimum wage debate from association members, some of whom support the wage increase, while others oppose it.

“People are asking me: Is this something we have to plan for?” Lamar said. “Someone I know said a contract employee came up to him the day after Obama’s [State of the Union] address and wanted to know when the wage increases would take effect. Overall labor costs may go up and there is this expectation that workers will receive a 30 percent increase in pay starting tomorrow.”

The confusion over when wages can be implemented and their application on a federal level extends to retailers with store locations in multiple states, too. “If the wage is higher in one state’s store than another, what do you do? You have people playing the same role in your company making different wages depending on state laws,” Lamar said.

Matthew Shay, president and CEO of the National Retail Federation, is also concerned with newly proposed minimum wage increases being a barrier to job creation. “It’s simple math: If the cost of hiring goes up, hiring goes down,” he said.