Minimum-Wage Hike May Cost More Than It's Worth

Biting the Bullet

One of the largest employers of workers in the country, restaurants are feeling the heat. According to the National Restaurant Association, one in 10 workers in the country are employed by restaurants.

NRA spokesperson, Maureen Ryan, says that with "the weak economy and highest food and energy price inflation in decades, the mandated wage hikes are an additional burden on restaurateurs."

She says the NRA did a survey last month talking to 1,300 restaurateurs in 18 states about actions they may have taken as a result of the 2007 increase.

"What we found is that they had to make some hard choices, 58% of restaurant operations increased menu prices; 41% reduced hours their employees work; 23% took no action and absorbed the cost from their bottom line."

"The wage increase couldn't come at a worse time," says Laura Goins, director of communications of Kentucky Retail Federation, which represents 6,000 retail businesses throughout Kentucky, one of the states adjusting to wage increase.

"We've heard nothing about our members letting employees go. The majority of our members are managing to absorb the cost of doing business. The danger, however, is that eventually the costs may have to be passed on to the consumers.

"Everyone's praying for the downturn of the economy to end," she says.