Minimum wage increase may backfire by rising prices

Published 3:21 am Wednesday, March 29, 2006

By By ANDY HAMILTON / Niles Daily Star
NILES - High school and college students account for 90 percent of Bob Cowan's work force.
The owner of the Niles Dairy Queen on South 11th Street near the stateline said he needs at least 30 people on staff by the middle of July to keep up with the pace of summer business. That is why Cowan is sure the recent increase in the state minimum wage will have a direct affect on his operation.
Gov. Jennifer Granholm Tuesday signed legislation to increase Michigan's minimum wage by more than $2 by the summer of 2008. The first jump of $1.80 will occur on October 1, 2006 and will make the minimum wage $6.95.
On July 1, 2007, another increase will increase the wage to $7.15 and, finally a year later on July 1, 2008, people in the state will earn a minimum wage of $7.40.
Cowan said he believes the result will backfire and cause problems for the same people the law is supposed to help.
Sen. Ron Jelinek (R-Three Oaks), who voted in support of the increase, said Senate Bill 318 was a case of making the best out of a bad situation.
The bill needed some adjustments before being accepted, Jelinek added.
Jelinek also said it's important for people to work toward earning a position that pays above the minimum wage.
Cowan's remarks were quite similar. He said he already starts his first time employees out above the current minimum wage at $5.50 and 30 days later gives a 25 cent raise.
Cowan said many of his employees are returning for summer employment during college or need a temporary job while in high school, and, he said the majority of them understand the affect the increase will have on the store's prices.
At least not for now.