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Minimum Wage Hike Could Derail Young Workers

Stocks in this article: GPS WMT PBPB

NEW YORK (TheStreet) - The minimum wage debate is heating up again, and Jersey Mike's Subs, a growing sandwich chain, is weighing in.

Jersey Mike's founder and CEO Peter Cancro told TheStreet in an interview on Wednesday that while the company has always paid its employees higher than the current federal minimum wage, raising the wage too high may box out younger workers looking for jobs.

"We have always been at the forefront of that with always paying people more," Cancro told TheStreet. "We have maybe 12-15 people employed in every location and it's always been a place to work at. We've always offered a higher than minimum wage."

However if Obama's proposal to raise the minimum wage to $10.10 an hour were to pass, "it makes it difficult though for the 14- to 18-year-old," he added, referring to the fact that employers may opt to hire older, more experienced workers at that wage, leaving less jobs available for the younger age group, who are typically looking for their first job.

The President announced the intention to raise the minimum wage during his State of the Union Address in January.

"If they raise it too high then they are kind of excluded from jobs so you'd hate to see that. Maybe have a different offering for the 14- to 15-year-old kids," Cancro said.

The White House early last year endorsed a minimum wage increase to $9 an hour, but increased its aspirations in 2014 to push for a $10.10 minimum. The move comes as the President and Democrats attempt to use the discussion as a wedge issue to help defeat Republicans in this year's midterm elections.

The Congressional Budget Office released a report on Tuesday that said the $10.10 minimum wage policy would cut about 500,000 jobs from U.S. employment. The report said the same scenario would boost the income of families living below the poverty line by $5.89 billion.

Yesterday, Gap (GPS) made news by saying it would raise the minimum hourly rate for its U.S. employees to $9 in 2014 and $10 in 2015. The pay increase will be effective across its six brands, including flagship stores, Banana Republic, Old Navy, Athleta, Intermix and Piperlime, which encompasses roughly 65,000 store employees, Gap CEO Glenn Murphy said in an internal company call on Wednesday.

The wage increase falls in line with the company's desire to "do more than sell clothes," it said.

The decision earned Gap praise from President Obama.

Wal-Mart (WMT) is considering supporting a raise in the federal minimum wage. The Bentonville, Ark.-based retailing giant is weighing the impact of additional payroll costs against attracting more consumer dollars to it stores, a spokesman for Wal-Mart told Bloomberg. --Written by Laurie Kulikowski in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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