As the dispute over the halt to Birmingham’s minimum wage hike moves to the courts, local businesses share their fears and future hopes concerning the blocked increase.
“It was rushed a little too much by the city council, I believe,” said Danny Winter, co-owner of both Buck Mulligan’s Public House and Crestwood Coffee Company, on the Birmingham City Council’s proposed jump from $7.25 an hour to $10.10. “Granted, it would not immediately affect us because all of my employees are in that range anyway.”
“However, forcing businesses to increase their minimum wage is not necessarily the best way to get to that mark,” he added. “I’m not sure of the best way to do it; it’s just one of those things that if you raise [the minimum wage] in five years then we’re back in the same position five years after that. In all honesty, I’m not sure there is a good answer in the way to do it. Unfortunately, you can’t rely on every business to do what’s right by their employees.”
Forces from both sides of the aisle have voiced their opinions and concerns regarding the wage war. That friction has fed into conflict between the city council and members of the state legislature. Legislators’ displeasure with Birmingham’s direction is blamed for state lawmakers acting on bills in recent months to change the dynamics of Birmingham’s government operations.
HB 399, 515 and 425 were all aimed at reshaping the governmental structure in the Magic City, a balance of power that has stood since the early ‘60s. HB 399, which has now been enacted, reconfigures the role of the Birmingham City Council in Birmingham Water Works Board appointments, stripping the mayor and council of their approval rights and reducing the council’s number of appointments from five to four.
HB 515, which is also now the law, grants the mayor of Birmingham greater influence over city finances and diminishes the City Council’s power in city departments. In addition to its expansion of mayoral oversight over historically City Council duties, the new law also prevents council members from sitting on city boards or other commissions.
HB 425, the final bill in the Alabama legislature trifecta, requires a 30-day notice or advertising period for city and town council pay raises, which would effectively nullify the Birmingham City Council’s own planned hike for themselves after next year’s elections. That bill is awaiting action by the state senate.
In that same vein, a house member representing Mountain Brook successfully pushed through HB 174, the Alabama Uniform Minimum Wage and Right-to-Work Act, aimed directly at preventing Birmingham’s minimum wage hike. Birmingham City Councilor Sheila Tyson, a vocal proponent of the minimum wage hike, has in recent months heavily criticized HB 174.
Rep. David Faulkner (R-Mountain Brook), who sponsored both HB 174 and the ongoing HB 425, defended his legislation by citing the wage hike’s “impact on job availability and small businesses,” as reported by a February article in Weld. For Tyson, this defense is not sufficient.
“The businesses always have a way of making more money,” said Tyson. “They would have got better service because their employees would have been happier and more willing to work. And they would have made money off their employees because if everyone gets more money they are going to go shop.”
According to Tyson, there would have been more than enough time for businesses to implement the hike, originally an incremental raise from $7.25 to $10.10 by July 2017. The first wave of the increase, from the current minimum to $8.50, was set for March of this year. Under pressure from the state Legislature’s actions, the council expedited the wage jump to the full $10.10, before it was ultimately invalidated by the state.
“We gave businesses plenty of time to raise the wages. You own your own business. That means you can raise the prices when you get ready. These companies can lower the price. That’s why they have sales. They have the capabilities of doing that overnight,” she added.
Gwen Brownlee, the owner of a small business, Miracle Work Alterations, does not agree with Tyson that there was enough time provided for businesses if the hike had passed uninterrupted.
“I don’t feel that enough time was given by the City Council, especially for a small or family-owned business, for that kind of increase,” said Brownlee. “I feel that a change can occur progressively and that the minimum wage needs to be changed. However, it can’t be changed overnight. About 50 cents every year or so and work up to that point would be something worth looking at.”
Other businesses expressed the same kind of concerns as Brownlee. Marty Felts, president and CEO of Edge Theater Group, also felt that the change would have been enacted in too short a timeframe. “Anytime when something so unexpected as [the hike] comes up it creates difficulties,” said Felts. “It would have been a substantial change all of a sudden. Anything as unexpected as [the proposed jump] is something to worry about. If you don’t know about something in advance, it’s hard to accommodate. We would have needed more time.”
Currently, the Edge 12 Theater in Birmingham employs 15 to 20 people, according to Felts, who said that if the change had been implemented, staff reductions may have been needed to outweigh the increased costs. “We would have probably had to cut employees to cover the costs,” he said. “We have a limit for [the] price of tickets to keep in business. If wages were to go up like that, prices would have to as well.”
Several local business owners, who preferred not to be identified, echoed some of the same sentiments as Felts and Brownlee. According to these neighborhood entrepreneurs, with a planned hike of that magnitude there would be no way to completely “absorb the costs.”
Some of these businesses currently pay more than the federal minimum wage and feel that the increase would put more expenses on the shoulders of their customers, which could hurt business. For them, “someone would have to pay the difference,” and that someone would primarily be the local Birmingham consumer.
However, there were some in the local business community who believe that the hike could have been counterbalanced. Chicken Salad Chick, the Auburn-based catering chain, employs 17 people in Birmingham and averages $9 an hour per employee.
According to Becky Bowers, general manager of the delicatessen, the jump would have been feasible. “I don’t think that the change would have affected us,” said Bowers. “$7.25 is not enough to live off of.”
Gary Bourgeois, owner of Renaissance Records, agrees with Bowers’s analysis. “I’m for the increase. If all people could have a living wage it could help the economy. We need a living wage, not just a minimum,” Bourgeois said.
“Personally, I don’t have a problem with [the hike]. However, I can see both sides. It’s like a double-edged sword. But, people should be able to pay rent and utilities. How can people pay their bills?”
Bourgeois said he would “be comfortable adjusting the wage every year. Something like a 3 percent cost of living increase per year. That kind of gradual increase could work. Businesses will do better because people will actually go buy things. People would benefit, be able to pay their bills and be more motivated in the workplace. I think raising the wage would help everybody. We’re all in the same boat.”
To keep workers, Winter and Buck Mulligan’s pay employees at a much higher rate than the standard federal minimum wage. For Winter, this model works because employee training costs would exceed his padded hourly wage rate in the long-run.
“The reason I have a lot of long-term employees is because I do pay them more than minimum wage,” said Winter. “By paying them more, I tend to maintain employees for a longer period of time. So I save thousands of dollars in training costs by not having to train someone new every other week. It’s easier to go ahead and pay a little more up-front then have to stretch the costs over an extended amount of time.
“Everyone here makes at least $10 an hour. My servers make $2.13 an hour, the server minimum wage, but I guarantee that they make at least $10. If they don’t make that with tips, then we make up the difference,” Winter added.
“The incentive keeps good employees. My biggest fear with the increase, and everyone being forced to do that, is that it’s going to force me, who already pays more than minimum wage, to pay more than that to maintain the level of employees that I have.”