The federal minimum wage rate is $7.25 an hour, and $7.95 an hour in Ohio.
Obama has urged passage of the Fair Minimum Wage Act of 2013 to raise the federal minimum wage to $10.10 an hour and index it to inflation in later years. U.S. Rep. George Miller, D-Calif., and U.S. Tom Harkin, D-Iowa, introduced the bill that would raise the minimum wage in three incremental steps.
But Obama called upon small business owners Tuesday night to voluntarily “give America a raise.”
“This will help families,” he said. “It will give businesses customers with more money to spend. It doesn’t involve any new bureaucratic program.”
But some area business owners and leaders hesitated on raising the minimum wage by 28 percent from the current federal minimum and 21 percent over Ohio’s minimum.
Todd Hall, owner of Todd Homes in Liberty Twp., said the consumer price index has been flat for the past several years, and supplies to manufacture goods have increased over the years — and some in the housing industry as much as 300 percent.
“They want to pay more money, but the reality is there isn’t more money out there to be paid,” said Hall, who is also the chairman of the Butler County Republican Party.
Eventually, he said, business owners will be able to accommodate raises, but raising it 28 percent over the federal minimum is a bit much.
“The two main drivers in the economy are the housing market and auto industry, and the reality is our prices have been flatlined or reduced,” Hall said. “You’re not talking a two to three percent increase, you’re talking a 25 percent increase.”
Fairfield Chamber of Commerce President and CEO Kert Radel said the minimum wage has not kept up with inflation over the years, and employers can only pay what the bottom line dictates.
“There is the economic impact upon the business community. I think business owners want to do everything they can for their employees … but they have to see what they can afford to pay,” he said.
A result in raising the minimum wage could be job losses, Radel said, because employers have a fixed amount of cash for payroll.
“It’s not a bad idea … it’s just a matter if middle America or Main Street USA can afford to do it on their own,” he said.
And if the minimum wage is raised, and employees are not laid off, the consumers will absorb the costs, said Rick Pearce, president and CEO of the Chamber Serving Middletown, Monroe and Trenton.
“They’re going to put that in the price of their product,” he said.
Pearce said historically minimum wage jobs are meant as stepping stones for the younger populations — for those in high school and college — to get acclimated into the workforce. And whether a position mandates a higher wage above minimum is determined by the market in the region.
“The market is really going to dictate your pay,” Pearce said. “Employers look for the competitive rate. (Hypothetically,) the market may be lower for a job in Dayton than it is in Cincinnati.”
Congressional approval would be needed to raise the federal minimum wage, but the president has the power to raise federal contract employee wages.
Wright-Patterson Air Force Base, the largest single site employer in the state, has the most federal contract employees in the region, but the Air Force could not provide numbers on how many earn less than the targeted hourly wage. The rule would take effect in new contracts to give contractors time to price bids compensating for the higher costs, according to the Air Force.
The base had 3,447 contract employees and a $344 million payroll in fiscal year 2012, the most recent figures available, base spokesman Daryl Mayer said.
Ross Eisenbrey, vice president of the labor-oriented Economic Policy Institute in Washington, D.C., estimated at least 200,000 federal contract employees nationwide earn less than $10.10 an hour today.
“I think it’s an important announcement to the public that the president, at least, the administration sees wage stagnation as a serious economic problem for the country,” Eisenbrey said, who urged the Obama administration to enforce payment for employees’ overtime.
Stan Soloway, president and chief executive officer of the Professional Services Association in Arlington, Va., didn’t think the president’s executive order would have a substantial impact on defense contractors.
“The fact is that government contractors performing these services are required to pay the salaries dictated by the Department of Labor” under the Service Contract Act, which often exceed Obama’s proposed change, Soloway said in a telephone interview.
He was concerned, however, the executive order “feeds a mythology” contractors treat employees unfairly. “The requirements of the federal prevailing wage laws and the government’s central role in determining the definition of a fair and reasonable wage are clear and long-standing,” he said in a statement. “Moreover, there is a natural concern that amid a national debate over the minimum wage, government contractors are being uniquely singled out.”
At Wright-Patterson, 625 government employees, who typically worked in lower paid jobs in retail and client services, such as the base exchange, golf course, child care center, lodging and bowling alley, were paid from non-appropriated funds, or revenue drawn out of commercial sales and user activity fees.
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