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Local News

Minimum wage hike a concern for local businesses, park districts

T.J. Banning owns three Rosati’s stores in Yorkville, Sandwich and Mendota, with the Yorkville store first opening nearly 20 years ago; but he said he is anticipating some challenges his businesses might face in the years to come after the Illinois minimum wage increase.

Banning said he definitely understood the need for a statewide minimum wage increase in general, but he hasn’t hired hourly employees at minimum wage in years because of local competition. He said wages typically start at $8.50 or $9 an hour, even for workers younger than 18.

“It’s been so hard to find employees for the last year, year and a half, that it’s kind of forced us to raise our offering just to get people in the door,” Banning said.

Banning’s comments come after Gov. J.B. Pritzker signed Senate Bill 1 on Feb. 19, which raises the state’s minimum wage to $15 over the next six years.

The minimum wage will go up to $9.25 in January 2020, then to $10 in July 2020. A third increase will take place January 2021, raising the wage to $11. The wage would increase by $1 every January after that until it hits $15 an hour in 2025.

For his Yorkville store alone, Banning said, it’s going to cost $40,000 for the first year’s increases for 40 employees. He said it will cost between $250,000 and $300,000 by the time the minimum wage reaches $15 an hour.

George Lennon, president of L.H. Mercantile, which owns 12 franchise Pet Supplies Plus stores, including a Yorkville location, said raising the hourly wage for nearly 200 part-time employees would result in a total payroll increase of $500,000 at $13 an hour, $750,000 at $14 an hour and $1 million at $15 an hour.

“It’s outrageous, and that’s not even increasing the rates of managers,” Lennon said.

Lennon said he it wouldn’t be good for him as a small-business owner to raise product prices before the larger stores do. He said it then leads to the question of where he can cut costs, whether that means employment numbers altogether or worker benefits.

“And I feel badly about that, because people deserve these benefits,” Lennon said.

Banning said the wage increase possibly could lead to staff cuts and increased workloads for remaining staff at his restaurant locations. He also said there isn’t a lot of marginal leeway for restaurants, since they’re not about to cut the quality of the food, and he’s already seeing prices from his suppliers starting to go up after the wage increase that could reach his customers.

“Bottom line, it’s going to fall right back to the prices of the product,” Banning said.

David Allen, operations manager for the Rosati’s stores in Yorkville, Sandwich and Mendota, said the hope is that the raise will help provide a stronger workforce and that higher wages means more spending as a whole locally.

“Time will tell,” Allen said.

Rich Zielke, executive director for Oswegoland Park District, said he anticipates a total payroll increase of $850,000, not including taxes or Social Security, by the time the minimum wage increase reaches $15 an hour. He said it’s not that uncommon for the agency to issue out about 700 W2s by the end of the year, with a lot of those workers being part time and a lot of those part-time workers being seasonal and younger than 18.

Zielke said he’s aware of the law exempting workers that are younger than 18, but the park district is in competition in trying to secure workers, and wages are important to those workers.

“Even though that’s something that’s available to us, that’s not something we’ve implemented or used because they can go to big-box stores down the road … and make a quarter or 50 cents more, and we would love to have their talents here with the park district,” he said.

Zielke said the park district is looking at ways to meet that increase. He said that might include looking at how they offer the same services with less cost to them, but raising taxes is something the park district never looks at doing as a first option.

“We’re going to try to be creative to try to have as minimal of an impact to our patrons as possible,” Zielke said.

Jim Pilmer, executive director for Fox Valley Park District, said the majority of the 1,275 W2s that were sent for last year were for part-time workers, a lot of them being 18 and older. He said he’s looking at a total payroll increase of $250,000 by 2025, and will look first to save money with equipment, along with re-examining property maintenance schedules for certain sites without jeopardizing safety.

Michael McCann, executive director for Sandwich Park District, declined to comment on how the now-signed law will affect the park district’s payroll.

Char Coulombe-Fiore, executive director for Montgomery Economic Development Corp., said she hasn’t found one business yet that has been in favor of the passed minimum wage increase, but didn’t start hearing a lot about it until the bill already was on the floor. She said the minimum wage increase that could result in increasing other pay scales also could provide an incentive to not go to college.

“So if people go to school and graduate and leave and start the workforce and they have student debt, and then you have minimum-wage jobs being paid more than jobs they might get, I know that’s a concern,” Coulombe-Fiore said.

Sherri Farley, executive director for Yorkville Area Chamber of Commerce, said she has heard an overwhelming amount of concerns from the business community regarding the change. Even though the chamber tries to remain as neutral as possible and the law has been signed, she said, she welcomes any opportunity to help in having people’s concerns be heard.

“I’ve always been one just to say don’t panic, educate yourself, talk to elected officials and voice your concerns and take it from there,” Farley said.

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