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JERSEY CITY, N.J. -- Several states will ring in the new year by raising the minimum wage, meaning many small businesses will enter 2012 with some tough choices on their plates.
Eight states are ticking up the minimum wage for non-salaried workers beginning Jan. 1. Those states are Arizona, Colorado, Florida, Montana, Ohio, Oregon, Vermont and Washington. Arizona is increasing its minimum wage by 30 cents an hour, from $7.35 to $7.65; Vermont is increasing its wage 31 cents, from $8.15 to $8.46; and Washington is increasing its minimum wage 37 cents an hour, from $8.67 to $9.04. The national minimum wage is $7.25 per hour, but varies state to state, according to a Wall Street Journal report.
While these wage increases mark a victory for employees, the 2012 changes will hit small businesses hard at a time when they are still struggling with economic challenges.
"It's a big deal," Skip Vallee, chairman and CEO of R.L. Vallee Inc., told the WSJ. R.L. Vallee is a 60-store convenience chain that employs approximately 450 workers in Vermont, New Hampshire and New York. Of those employees, nearly half earn minimum wage.
To cope with the wage increases in Vermont, the c-store business plans to cut employees' work hours in that state and is considering having employees there pay a larger share of the premiums for their employer-provided health insurance.
Raising the minimum wage is often recommended by lawmakers to compensate for cost-of-living increases, and some research suggests mandated wage increases don't necessarily result in job losses or reduced work hours, according to the news outlet.
There is no "evidence of any loss of employment or hours for the type of minimum-wage changes we have seen in the U.S. in the last 20 years," said Arindrajit Dube, a professor of economics at the University of Massachusetts Amherst. Earlier this year, Dube and two colleagues used government data to compare employment figures in counties that border states with different minimum wages.
If employers cut back on labor, it's generally due to poor economic conditions, not pay requirements, Dube added.
But opponents argue that minimum-wage increases do have unintended consequences. "When you raise the price of something, including entry-level labor, you're going to decrease demand for it," said Michael Saltsman, research fellow at the Employment Policies Institute, a nonprofit research group in Washington, D.C.