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Minimum wage increase forces local business owners to make tough decisions

A law that went into effect Jan. 1 that increased the minimum wage from $7.25 an hour to $8 has forced small business owners in southwest Baltimore County to make tough decisions.

"We do have employees who are paid minimum wage. As an effect, we'll have to increase our prices by 10 percent today," said Sally Grace, owner of Peace a Pizza and dessert shop Babas in Catonsville. "There are pros and cons: people are getting paid more but people are going to have to pay more to go out."

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Sorrento of Arbutus, a pizza and sub restaurant, will also have make some changes as a result of the law, said Brandon Kostinsky, operations manager of the family-owned restaurant.

"Most of my employees make minimum wage or close to it, so we'll have to cut back people's hours and some people may have to work part-time," said Kostinsky, whose grandfather founded the operation in 1965.

The new law specifies the minimum wage will be raised in increments, to $8.25 by July 1, 2015, $8.75 an hour by July 1, 2016, $9.25 an hour by July 1, 2017, and to $10.10 an hour by July 1, 2018..

Maryland was one of 10 states, along with Washington, D.C. to increase the minimum wage in the 2014 legislative session.

Some restaurant owners with employees earn tips say the new law doesn't affect their bottom line.

Jim Andrews, owner of the newly opened Oak Creek Cafe in Arbutus and Ship's Cafe in Catonsville, said he already pays his employees more than the minimum wage, so the increase won't affect his businesses.

"We try to stay a bit ahead of the curve, because people need to feed their families and they have bills to pay," Andrews said.

The legislation passed by the General Assembly kept the hourly wage for tipped workers at $3.63, as long as their wages plus tips equal the minimum wage, to the disappointment of nonprofit Maryland Working Families, a group that led the effort to raise the minimum wage.

The group created the coalition Raise Maryland, comprised of 60 organizations who fought to see a minimum wage increase. They wanted to see the minimum wage of tipped workers equal 70 percent, rather than 50 percent, of the minimum wage, according to their website.

They suggested that the wage be increased on a faster timeline — to $10.10 by July 1, 2016, according to their website.

"We're happy that this bill was passed [so] 77,000 workers will get a 75-cent raise," said Charly Carter, executive director of Maryland Working Families. "That might give them the ability to buy a car or extra groceries. We're going to see that money going back into Maryland's economy."

Still, the organization wants to do more to ensure that the minimum wage rises with the cost of living, Carter said.

"This year, our focus will be on earned sick leave," Carter said. "But I would not be surprised to see legislators who go back and put in a bill about indexing the minimum wage to the cost of living.

"What we're hearing from new legislators coming in is that they're dissatisfied with the legislation that was passed," Carter said.

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Many business owners say they understand the need to increase the minimum wage, but say it does affect their bottom line.

"I can't imagine living on $7.25 an hour, so I'm happy that it's being raised," Kostinsky said. "But at a business level it's hard, because I have to think of ways to avoid raising prices for my customers."

Patrick Donoho, president of the Maryland Retailers Association, an organization that lobbied against increasing the minimum wage, said the wage hike will be tough on the retail companies the organization represents which range from big-box retailers like Giant Food and Walmart to small, single store operators.

"The economy in Maryland has been flat for two years," Donoho said. "Payroll went up Jan. 1 and now you have to find a way to pay."

Donoho said the proposal to increase the minimum wage to $10.10 by 2016 would have been an "extremely difficult" adjustment for retailers.

"If legislation is introduced in the next session, we will adamantly oppose it," Donoho said.

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