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Minimum wage boosts affecting 10 million workers in 22 states with varying outcomes

Those who own small businesses say raising minimum wage is causing them to kill jobs and raise prices.
Restaurant owner Kim Tan
Posted at 6:05 PM, Jun 10, 2024

There are employees, and there are employers — so, what exactly happens when wages go up?

Kim Tan opened the first Crab Hut in 2007. She did it with her husband and her sister as a way to help her parents.

"In the beginning, it wasn't as hard for us because things were still very affordable back then," Tan said.

Then came a second location. The businesses weathered the pandemic, but now the owners say the latest minimum wage hikes in California might be too much to overcome.

"Every time minimum wage increases it's like that domino effect to all of us. And, you know, we have to raise our prices," Tan said, "Our margin is already so thin that if we don't raise our price, we have to close."

Tan says customers have been patient, but some have disappeared. The restaurant now closes for lunch because she says they can't afford to pay overtime. So far, they haven't had to let anyone go.

"There's a lot of people on our team that's depending on us, so we have to do everything we can," she adds.

This map shows how much you have to earn to afford rent in every state.

Don't Waste Your Money

This map shows how much you have to earn to afford rent in every state

Don’t Waste Your Money Staff
7:56 PM, May 19, 2024

Tan takes a pay cut herself so that she can pay her staff. Many of her employees say they're benefiting from the increase.

Employees like Kevin Kean, who says, "I have like five credit cards and I'm down to two. Yeah, I also have car payments, which is about $500 a month. No matter if it's like just a dollar or a couple of cents more, they always help in the long run, which I mean, I appreciate it."

Professor Barton Hamilton with the Olin Business School at Washington University says there's always winners and losers when it comes to raising the minimum wage.

"You know, not surprisingly, when the cost of labor goes up, we kind of expect employers to hire fewer people. Their ability to handle or to accommodate a minimum wage increase also depends on how much they can pass on their labor cost increases to consumers.," Hamilton said.

For Tan, she says the future is filled with uncertainty, "We're gonna try our best to ride this, but closure is actually in the talks. We hope that it doesn't get there, but it is something that is lurking around that might happen to us."