Virginia’s minimum wage will increase to $11 per hour in less than a week, which is getting some mixed reactions from members of the commonwealth’s business community.
On Jan. 1, the minimum wage will increase by $1.50 per hour, going up from $9.50 to $11. This is the second phase in the state’s incremental minimum wage increase. In May of 2021, the minimum wage went up from $7.75 to $9.50.
Although this will put more of a burden on businesses, many have already been forced to increase wages in recent months because of a pressing labor shortage, according to Nicole Riley, the Virginia director for the National Federation of Independent Business.
Riley told The Center Square that most businesses are already paying their employees more than $11 per hour to incentivize potential workers. However, she said the higher minimum wage could negatively impact certain businesses who would normally hire younger and inexperienced workers later in the year.
Any time labor costs increase, there will be a trickle down effect, Riley said. To absorb costs, a business might spread work out among current staff, rather than hire another worker, she added. In some cases, a business could pass the costs down to the consumer through higher prices, but she said the high inflation rates could make that difficult to sustain and result in losing customers.
One organization called Business for a Fair Minimum Wage is embracing the higher wage. The group’s CEO, Holly Sklar, released a statement in which she said low minimum wages hurt workers who can’t afford basics and hurt businesses that count on people having money to spend. Michael Lastoria, the CEO of &pizza and member of the group, said higher wages show workers they are valued.
“Since the start of the pandemic, &pizza has opened 20 new locations [nationally] and we are planning to open 40 more in the next 12 months or so,” Lastoria said in a statement. “Our focus has always been on providing quality jobs and higher wages is the single clearest way to say to our workforce, ‘We value you.’ All of our work counts for nothing if our people cannot live on the wages we pay them.”
The restaurant has five locations in Virginia, all of which are in the Washington, D.C. metro area.
Stephen Haner, a senior fellow for state and local tax policy at the free-market Thomas Jefferson Institute for Public Policy, told The Center Square that most businesses have likely already prepared for the increase.
“The increase to $11 has been scheduled for more than a year, so businesses should have it baked in,” Haner said. “If it means fewer people, they've done it already. Economic events have basically overtaken it and plenty of employers are already there or have gone higher. We are now in the ‘dog chasing its tail’ phase, where wages and prices just rise in lockstep.”
An incremental increase in minimum wage was passed by the General Assembly and signed by Gov. Ralph Northam last year. After it increases to $11 this weekend, it is set to go up to $12 on Jan. 1 of the following year, 2023.