Minimum wage increase adjustments ongoing

CNJ staff photo: Sharna Johnson Terri White, front, labels, wraps and feeds jalapeno peanut brittle into a machine while Fawn Goodwin packages the candies into cartons Thursday after they are sealed by the machine. Leslie’s Candy Co. owner Greg Southard said he cut his staff size and brought in machines to compensate for a 2009 increase in minimum wages.

Sharna Johnson

As the two-year anniversary of a more than $2 increase in the minimum wage draws near, the hit ranges from heavy at some employers to nonexistent at others.

The statewide minimum wage jumped from $5.15 to $7.50 by January 2009, outpacing the federal minimum of $7.25.

The increase, coinciding with economic downturn, meant Leslie’s Candy Co. owner Greg Southard had to adjust his operation to compensate. He said the company is still feeling the effects.

Southard, who ships his specialty candies nationwide, said he has a formula and history that helps him determine what percentage of payroll he can afford for a product to be profitable. With the mandated wage increase, “unfortunately it became very difficult to do that when you can’t increase a minimum wage person without increasing the people that have been there longer.”

To balance out, he down-sized his staff from 16 to 10, eliminating part-timers, and mechanized portions of the candy-making process, replacing people with machines.

And some products that couldn’t be mechanized he has moved away from.

“I was able to cut the number of employees — machines are doing the work that the additional employees were doing before,” and he said he no longer hires high school students and other part-time employees as he liked to do in the past.

Southard said while eventually everything will balance out, the economy is also a factor in how he plans and organizes his business.

“The one variable that I can do something about is labor. I can’t do anything about the cost of sugar (or) the cost of cellophane… I’ve had long-term customers that have gone out of business because of the economy. My feeling is I’m not going to hire anybody until there’s a place for them,” he said.

“The market at some point will dictate that it’s worthwhile for us to hire additional employees. Our business has been good through the recession but there’s so much uncertainty.”

In the grocery business, however, there was no noticeable change, even with the wage increase and recession.

“The population; I think they just keep eating,” said Randy Gant, a manager at S&S Supermarket in Clovis.

“We’ve been real lucky.”

Gant said he worried about what would happen since the store does employ a significant number of minimum wage employees, but if anything, the store has more employees now than it did prior to the increase.

And City Manager Joe Thomas said though there was some concern in advance, the city ended up not feeling the change because it had only one grade in the minimum range with about three or four employees who have since transitioned to higher pay levels anyway.

“When it actually went into effect it actually had a minimal impact,” he said.

But the downside is that the increase — between the mortgage crisis, rising expenses and a soured economy — didn’t really help the people it was aimed at, according to Tina Zamora.

“It made the employers have to increase their costs for everything and have to cut back — the public, in general, is not being able to spend that money,” said the debt and credit counselor.

Zamora, who has worked with Consumer Credit Counseling Services in Clovis for nine years, said local families are still struggling and the recession is starting to impact the area, especially when it comes to housing.

Foreclosures and credit woes are on the rise locally, she said, and while cities along the U.S. coasts are almost through the crunch, the troubles are working their way to the middle of the country, albeit delayed.

While it usually takes about a year for a community to adjust to a minimum wage increase, she said that hasn’t happened yet in this case.

With her typical client earning an income of $25,000 to $35,000 a year — the equivalent of $12 to $17 an hour —she said the wage increase really only impacts a new person going into the workforce and actually drives up costs for established employees who likely aren’t getting increases.

“People are just not being able to meet their mortgage payments and interest rates are increasing dramatically,” she said.

“They’re still struggling because yeah, the minimum wage went up, but so did all the costs of gas, clothing, their housing; rent went sky high and it’s not coming down.”

Zamora said her office works to help people structure and pay down their debt, while looking to the future and finding ways to maximize their earnings and improve their careers.

Guiding people on taking the correct number of the deductions throughout the year so they can use the money when it’s needed most, getting new jobs, encouraging education and improving their marketability, she said are some of the ways she tries to help people stabilize and improve their situations.