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TheStreet Open House

Will higher minimum wages hurt or help these restaurant and hotel stocks?

James Dennin, Kapitall: Seattle and Maryland raised their minimum wages. Could these restaurant and hotel stocks get a boost? 

President Obama and the Democratic congress have been eager to leverage t he overwhelming popularity of a minimum wage increase, which could be as high as 70%. That effort has stalled, however, and so the battle is shifting to the local level.  

Over the weekend Maryland and Seattle executives signed bills signed bills into law raising the minimum wage. At $15 an hour, Seattle's minimum wage would be the highest in the country. The steep hike has garnered opposition from unexpected places: the companies that already had high wages and benefits.

The most often cited example is Dick's, a privately owned restaurant chain in Seattle. The family that owns Dick's is worried about a minimum wage hike that doesn't take into account benefits. Dick's already pays wages well above the national minimum, with salaries often starting around $9 an hour.

That's on top of generous benefits, which include health insurance, college scholarships, and a smoking cessation program, among others. They worry that a minimum wage of $15 an hour would force them to cut benefits.  

Read more from  about the minimum wage debate.

About half of states have laws setting the minimum wage higher than the Federal level, with Connecticut, Hawaii, and Maryland joining the growing list this spring. Assuming that a compromise isn't reached on the national level, we might expect the wave of pay hikes to continue.

If that's the case, then hospitality will certainly be the most affected industry. Hotels and restaurants account for at least half of the workforce currently earning minimum wage, so we decided to screen those industries for companies that already had higher wages and benefits.

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