How much is that cupcake? Small business owners say jobs, prices will be impacted by minimum wage hike

by | Nov 11, 2020

Florida’s minimum wage initiative, raising the minimum wage to $15 per hour by 2026, passed last week with 60.8% of the vote, just over the 60% minimum required for approval. Florida’s businesses are now left with the challenge of implementing the increase, while managing to remain in business.

Not all businesses will noticeably suffer, mostly those with higher revenue or who hire employees already making significantly above minimum wage. But for those with tighter profit margins, the increase is a cause of concern.

The state’s minimum wage, currently at $8.56 an hour, will gradually increase, first to $10 per hour by September 30, 2021, and then another dollar each year until 2026.

Vonesa W. Wenzel is one of the owners and founders of HomeCare Connect Inc., in Winter Park. HomeCare Connect is a specialty managed care company in the workers’ compensation industry, focused on home health care and related services for injured workers. Last month, her company was ranked the number one Central Florida Women-Owned Businesses by the Orlando Business Journal, with a gross revenue of over $47 million in 2019.

She said, “We pay our direct employees well above the minimum wage, so it won’t impact us there. I think (raising the minimum wage) was the right thing to do. Some of our providers in the field that we work with through our network, it might affect them. It may squeeze our margins a little, but we’ll be fine.”

However, Mark Cross, owner of Tasty Pastry, in Tallahassee is concerned. His small business doesn’t see the millions in revenue of a business like HomeCare Connect.

“My margin is very thin as it is,” he said.

He explained that it is labor intensive to make baked goods and then sell them at a reasonable market price. “We’re selling doughnuts and cookies and birthday cakes, and they aren’t high ticket items. The cost of production is high. (The higher minimum wage) is just gonna raise the costs of production,” Cross said.

“My payroll is already 42 percent of gross sales. If it increases, I have to increase the revenues somehow to cover that. It will possibly make products too costly for people. And that will hurt our sales,” he continued.

He said his only employees that are paid minimum wage are entry level, usually high school students. After 90 days, if they stay, they’re raised up to $9 an hour and more as they stay longer. They don’t stay at minimum wage very long. His baker makes $15 or $16 per hour.

“My concern is when I have to pay the entry level people or store clerks that don’t benefit the business as much as my production staff, my whole wage scale has to go up as well. I think its gonna move our whole payroll expense up over time.”

He said over the previous four years, the economy was good, he was increasing sales and revenue and hiring more people. But “the wage increase will have an overall inflationary effect on our economy. Everything is going to go up,” Cross said.

He said if the price increases on his goods affects demand and fewer clients come through the doors, it will affect his ability to hire more people. “I think the public doesn’t really understand how this wage increase affects the costs of goods. It will go up.”


%d bloggers like this: