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Small businesses warn prices could go up with minimum wage increase

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Baton rouge – Small business owners fear the push to nearly double the federal minimum wage to $15 will be too costly. Democrats in the U.S. House and Senate introduced plans to phase-in an increase over the next four years Tuesday.

“Everybody’s cost will go up, we’ll absorb some and we’ll have to pass the rest on to the customers,” said Neal Hendrick, the owner of Zippy’s.

Hendrick has spent the last months adjusting to COVID-19 restrictions, and now another change may be on the way. Federally, and in Louisiana, the minimum wage is set at $7.25 an hour. Lawmakers are looking to gradually increase that to $15 by 2025.

“Labor is a huge cost of our business. We run 700 to 1,000 hours of labor a week at Zippy’s. So if you’re talking a $7-an-hour increase of labor put in over a couple years... At that rate there’s no way we can hold that and not pass it on to customers by raising prices,” Hendrick said.

U.S. Senator Bill Cassidy has the same concerns. He says increasing minimum wage during the pandemic is a double-hit to the restaurant industry.

“It’s much better to have a job, than not have a job,” Sen. Cassidy said. “Yes, it’s nice to earn more, but if you don’t have a job all you’ll be earning is unemployment.”

The owner of Pastime near downtown says the spike in labor costs is a hit he won't be able to afford. Over at Memphis Mack on Larkspur, the owner would like to see minimum wage based on cost of living. He wants to provide opportunity for talented food professionals but said he can't if he's out of business.

"If it's here it's here. We’re going to deal with it as it comes,” Hendrick said.

The minimum wage was last increased to $7.25 an hour in 2009.


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