Updated: Wednesday, 22 Jul 2009, 7:08 PM EDT
Published : Wednesday, 22 Jul 2009, 7:08 PM EDT
INDIANAPOLIS (WISH) - Thousands of Hoosiers will get a raise Friday when the minimum
wage goes up. However there's concern the increase might add to the
state’s already high 10.7% unemployment rate.
The minimum wage is increasing 70 cents an hour, which equals $28 a week. The timing of the raise has people worried; increasing costs come at a time when businesses can least afford it.
Depending on the season, 20 to 25 people work at the
store in downtown Indianapolis. While employees earn more than
minimum wage and won't be getting a raise Friday, Shola Ogundiran
believes the wage increase is still sweet.
“I think it's a great idea. As the cost of living rises I think wages should rise as well,” said Ogundiran.
Manager Matt Csanyi said it's not likely to have a big impact on the way he runs the store.
“Even though it is going to increase our cost basis a
little bit, I still think it's a worthwhile thing in that driving
wages up will be a good thing for the workers that work
here,” Csanyi said.
According to William O'Donnell, director of graduate programs at the Butler University College of Business, raising wages in the middle of a deep recession is not good economics.
“It will disproportionately impact young people and minorities and small business owners will be in a position of whether they can continue to pay these people of if they will have to get by with fewer of them,” he explained.
O'Donnell said the raise should wait for better times. Jobs in Indiana are already at a premium with more than 345,000 Hoosiers currently looking for work.
Shola Ogundiran said, “In order to pay people well you have to downsize the amount of people you hire and that's going to raise the unemployment rates.”
Butler's O'Donnell said an increase in the minimum wage raises other costs that are based on overall payroll like taxes and insurance.
In addition, the minimum wage has gone up $2.10 since 2007 and this is a cost, which can have a real impact on the bottom line, said O’Donnell.