Small Business Fear Minimum Wage Hike Would Kill Jobs

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Hundreds of thousands of Michiganders could see a bump in their hourly wage, if President Barack Obama gets his way.

The president called for a $9 minimum wage in his State of the Union address Tuesday. Michigan's minimum wage is currently $7.40, just higher than the national $7.25 rate.

Advocates for the state's low income population are applauding the proposal, but small businesses worry it could be a job killer.

"I don't see anything wrong with anybody earning $9 an hour, $10, they deserve it," restaurant owner Bill Falsetta said. "They work hard, people in this industry work hard."

But with the current economy, Falsetta doesn't see how small businesses can make it happen. Margins are tight already and about forty percent of his forty employees are minimum wage.

"Where's that money coming from? Is gas going down? No," he said.

Falsetta says there is no way his restaurant could swallow the cost of a minimum wage increase, on top of insurance changes under the federal Affordable Care Act. The only option is one he hates, price increases.

During his address Tuesday, President Obama argues the current minimum wage is not livable.

"A family with two kids that earns the minimum wage still lives below the poverty line, that's wrong," he said.

In addition to the boost to $9, Obama wants minimum wage to be tied to the cost of living, so increases are guaranteed to meet inflation.

"The vast majority of people here in Michigan that get minimum wage are over 20-years-old, many of them are partially college educated, many of them are working full time, many of them are parents, many of them are sole-bread winners for their family," Karen Holcomb-Merrill, with the Michigan League for Public Policy explained. "So, this isn't just about helping teens make more money, this is about helping families here in Michigan."

Holcomb-Merrill also says it's good for the economy. She says workers who are paid more, spend more.

The Michigan Restaurant Association sees it differently.

"Wage mandates of any kind don't exist in a bubble," Justin Winslow, with the association said. "So for us and all of our small business owners, you're talking about a decrease in the overall number of jobs and in the amount of hours worked by these employees that still exist."

The federal minimum wage hasn't changed since 2009. Under Obama's plan, it would increase gradually to $9 by 2015.

A Michigan lawmaker is also calling for higher wages. On Tuesday, Bert Johnson introduced legislation that would bump up the state's rate to $10.

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