Local Business Apprehensive About Arkansas Minimum Wage Increase

Southern Auto Supply resolves to work through the recently passed minimum wage increase

J.R. Smith, manager of Southern Auto Supply in Van Buren, Arkansas expresses concern about the upcoming increase in minimum wage that was recently passed on the November ballot.

“With our particular operation, we have little overhead as far as inventory and property rental since both the initial investment of inventory as well as the property has been paid for. Even still, our market is a very competitive region. As we look to increase our sales staff we will now have to increase sales. Used to, for every dollar in profit you need to make at least three in sales to cover the difference.  Now with the market being as competitive as it is, it’s more like one to four.”

SONY DSC
Photo by Kendee Hughes

The increase is set to take place in increments over the next three years. On January 1, 2015 the wage will increase to $7.25 per hour, then $8.00 per hour on January 1, 2016, and finally $8.50 per hour on January 1, 2017.

New York Times’ Steven Greenhouse said, “In state after state, labor unions and community groups have pushed lawmakers to raise the minimum wage, but those efforts have faltered in many places where Republicans control the legislature,” in his article Little Opposition Seen in Some Votes to Raise State Minimum Wages on November 3, 2014.

Minimum wage in Arkansas is currently set at $6.25 per hour, which is below the federal minimum wage set at $7.25 per hour. According to Smith, “The misconception of how that helps the economy is very distorted. Most people don’t realize where the difference in those wages comes from.”

Key To Minimum Wage Hikes: Ballot Initiatives

As prices for food and general services have increased over the last several years, Arkansas’ minimum wage has remained below the federal minimum level. Supporters have pushed for the increase because they say that so many people are struggling to make ends meet due to the prices of goods always increasing.

Department of Labor Photo
Department of Labor Photo

“I expect to see a drop in the workforce as businesses look to automate more replacing work with machines. McDonalds is looking at machines that will prep, cook, and assemble hamburgers right now. What’s next?” says Smith.

According to James Sherk, a Senior Policy Analyst in Labor Economics with the Heritage Foundation, raising the minimum wage often prompts small business owners to replace some impaired adults who may really need the job with younger teenagers. What is Minimum Wage: Its History and Effects on the Economy

Although Smith has concerns about the wage increase, he implied that Southern Auto Supply continues to provide excellent customer service and take care of all employees. They employ two part-time workers who receive minimum wage pay.

One of those workers, High School Junior, Cody Ackerman began working for the company about two months ago as a cashier and parts deliverer. Although only making minimum wage Ackerman says he chooses to walk through the doors everyday and make everyone feel welcome and provide excellent customer service.

However, in regards to how he believes the wage increase will affect him he said, “It will help me with being able to afford more than I am able to now.”

https://twitter.com/USDOL/status/492431058994855936/photo/1

Ackerman also believes he understands the flip side of the increase and a business owner’s perspective that, “they are just trying to make it like everyone else.”

Facebook Comments