HANFORD — Local business owners fear the potentially negative effects of California's minimum wage increase.
The minimum went from $10 to $10.50 an hour on Jan. 1 for employers with 26 or more employees. It will increase each year through 2022, at which point it will be $15 an hour.
For businesses with less than 26 employees — the majority of the employers in Kings County — the increases start in 2018 and reach $15 an hour in 2023.
Don Way, co-owner of Cost Less supermarket in Hanford as well as seven other Cost Less locations in California, said he raised the wage for baggers – the lowest-paid workers in the supermarket – from $10.25 an hour to $10.75 an hour on Jan. 1.
Way said that to keep separation between entry-level workers and experienced employees with more responsibility, he also raised wages for a number of higher job classifications at Cost Less.
"It was a compression from that [minimum wage] increase," he said. "It resulted in a number of adjustments to different positions."
"As you do promotions, there needs to be a reasonable pay increase that goes with that," he said.
Way said that how much he raises prices on items in Cost Less to absorb the wage increases depends on how much his suppliers "pass on [cost] increases to us."
Way said that, as a discount grocer, he operates on a smaller margin than other stores and depends on a high volume of sales to maintain profitability.
Way said he has about 500 employees total in all eight locations.
"The minimum wage increase is what it is," he said. "This is a cost-driven business, like any business."
John Lehn, CEO of Kings County Economic Development Corp, said the minimum wage increase "affects a lot more people indirectly than directly."
He said it puts pressure on employers to pay workers higher up the pay scale more to maintain the gap between them and the minimum wage workers.
He predicted employers would offer fewer total jobs and require workers to do more. He also predicted "significant" price increases as the law is rolled out.
"I hope I'm wrong, but we're seeing price increases already," Lehn said.
Lehn said prices are going up for fast food.
Lehn is worried that employers thinking about locating or expanding in California will go elsewhere -- say, to Nevada –- where no such law exists.
"I think that's certainly a common thought of folks who are in the business attraction industry," he said.
Lehn was referring to one of the main tasks of Kings EDC: to keep employers in the county and bring in new ones.
One business that is worried about the impacts is Dickey's, a fast-casual restaurant in the Target shopping center of Hanford.
Hanford resident Bryan Roche co-owns the Hanford location along with several other Dickey's in California, each of which has about 15 employees.
That puts him well over the 26 employee threshold.
Roche said he kicked the wage for entry-level workers up from $10 to $10.50 on Jan. 1.
He said he kept some other more skilled employees at $10.50, although he knew that they might not like it.
Roche said he did that to avoid having to immediately raise prices.
"We didn't implement a price increase because I feel the economy is a little stagnant," he said. "It's been a struggle to meet our [new] labor requirements."
Roche said his restaurants are doing "OK," but also said he doesn't know "how much longer we can [absorb] a minimum wage increase without a price increase."
Roche wonders to what extent his customers, whom he described as "middle-class," will be willing to pay more for Dickey's food.
Dickey's, as a fast-casual destination promoting premium food quality, is more expensive than fast food like McDonald's. He said he's thought of leaving the state.
Roche said Dickey's locations in Dallas, where the chain started, are doing better. The minimum wage in Texas is $7.25 an hour.
"I've lived here all my life," he said, referring to his longtime residence in the San Joaquin Valley. "My kids are here. It would be a tough decision to move. It's something I've pondered."
"It's fearful and uncertain, the next five years," he said. "Hopefully, things will work out for the best."
Meanwhile, local landmark the Vineyard Restaurant in Lemoore's manager Joe Jones said he was somewhat but not overly worried about potential negative impacts.
Because Vineyard has less than 26 employees, the minimum wage hike won't go into effect until Jan. 1, 2018.
Jones is betting that, even if prices at the restaurant increase to compensate for the rise, loyal customers the diner has built up over the years will keep coming.
"I think we'll be OK," he said. "My family has owned the place for 22 years. We seem to do pretty well."