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Published July 20, 2009, 08:35 AM

Mandated minimum wage raise could reach consumers

Fargo, ND (WDAY TV) - Beginning Friday, people making minimum wage will get a 70-cent an hour boost. It's being mandated at the federal level, but some area businesses say, it’ll have a huge impact on them. WDAY 6 Reporter Stephanie Goetz joins us live from one of those businesses to tell us how the increase will also reach consumers.

By: Stephanie Goetz, WDAY

Fargo, ND (WDAY TV) - Beginning Friday, people making minimum wage will get a 70-cent an hour boost. It's being mandated at the federal level, but some area businesses say, it’ll have a huge impact on them. WDAY 6 Reporter Stephanie Goetz joins us live from one of those businesses to tell us how the increase will also reach consumers.

Coffee shops like Babb's Coffee House in Fargo pay many of their workers minimum wages. So adding almost a dollar to what they have to pay out may effect the price of a cup of coffee and how often you can get it.

Getting your morning cup of Joe steeped and simmered could soon be a bit costlier thanks to the federal government. The 70 cent federal minimum wage increase starts Friday, bringing the hourly rate to $7.25.

"Most people, they complain about prices already but they want wages to go up, but what happens when wages go up, it has to balance out."

Places like Babb's Coffee House in Fargo are doing everything possible to keep these precious morning kick-starters cheap by first holding off on hiring or cutting back on business hours.

“Even with the minimum wage going up last year $5.15 to $6.55 we didn't raise prices."

But employers aren't just paying out the extra wage. Federal and state unemployment and workman's compensation can add as much as a dollar per hour to each employee.

"If you have two employees behind the counter that's 18 dollars, well your sales, you at least have to sell 36 dollars in an hour to cover that at least and then that doesn't include your rent, your heat, and your operating expenses."

But other businesses say they won't feel the wage increase because so many already pay over minimum wage. Only 15 of the 500 jobs listed with job service of North Dakota pay $7.25 an hour.

"The market in Fargo-Moorhead has always been well beyond whatever the minimum wage has been, except for our server staff."

But for businesses that increase wages with federal and state regulations, changes to their price menu may be coming soon.

The increase in federal minimum wage goes into effect Friday. Babb's owner says they will keep their prices the same, for now and re-evaluate after about 6 months to see if they need to raise the price of their cups of coffee.

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