McHenry County business owners fear layoffs, higher prices with new minimum wage

With measure in place, local business owners fear layoffs, higher prices

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Tom Yucuis, owner of Butcher on the Block in Lake in the Hills, said he employs more than 35 people, several of which are high school and college students, during peak times of the year.

But with the state's minimum wage expected to grow to $15 an hour by 2025 after Senate Bill 1 passed in the Illinois House on Thursday, Yucuis said he foresees a devastating effect on small businesses.

“At $15 an hour, it will force us to decrease the amount of people we employ, force employees to work harder and force us to raise prices, which will make it harder to stay alive since we’re competing with big-box stores,” Yucuis said.

For several area business owners, the question does not come down to whether they think their employees deserve a higher wage. It is more of a question of whether smaller companies can bear the cost of the wage increase without it having a detrimental effect on operations.

In that regard, Yucuis said, businesses should be able to make their own decisions on a fair wage.

“We believe in paying people what they’re worth, and we want to be able to make those decisions,” Yucuis said. “I don’t believe the state of Illinois should have their hand in my business and tell people what to pay employees.”

“You treat people fairly and you’ll keep your people,” he added.

Starting Jan. 1, 2020, the minimum wage would go from $8.25 an hour to $9.25. It then would increase to $10 an hour in July and reach $11 an hour Jan. 1, 2021. After that, the minimum wage would grow by $1 a year to $15 an hour by Jan. 1, 2025.

Claudia Kendzior, owner of Morkes Chocolates in Huntley, said she always strives to pay above the current minimum wage, but a $15-an-hour wage would be hard to absorb.

“I support people making a fair wage, but I won’t be able to support that wage,” Kendzior said.

Once the wage increases $2 or $3 is when Kendzior said she may have to start looking at reducing services, cutting employees or raising prices.

“We try to be as fair to the customers as we are to our employees, and this will become a real tough balance,” Kendzior said.

Cindy Heidemann, owner of ABC School of Cosmetology and Nail Technology in Lake in the Hills, said she offers $10.99 an hour to her employees, so she is not worried about immediate effects.

“Some business owners I’ve talked with are scared right now, but I can understand both sides,” Heidemann said.

For larger industries such as manufacturing, there is a concern that the higher wage may result in a less skilled workforce, especially when such companies already are struggling to find skilled employees.

Joe Shulfer, president and CEO of Mathews Co. of Crystal Lake, said at $15 an hour, which is right around the entry-level wage in his factory, employees currently making that amount or slightly more eventually might be replaced by people who don't have the same level of experience.

“There will be a huge shift in skill sets,” Shulfer said.

To ease the financial burden of a $15-an-hour minimum wage on small businesses, SB 1 also includes an income tax credit available for businesses with 50 or fewer workers for
25 percent of the total cost for increasing wages that gradually will drop to
5 percent by 2027.

Woodstock Chamber of Commerce Executive Director Danielle Gulli said local businesses she has spoken with don’t feel the tax break will be very meaningful.

“They’ll have to pay higher [workers’] compensation and payroll tax and a variety of things,” Gulli said. “It doesn’t cover additional costs in a significant way.”

Gulli said there also is concern that instead of drawing businesses and employees to the state, as some proponents have argued, the bill will push small businesses out of the state.

“States around us aren’t moving forward with this high of an increase, and with our current budget issues and folks leaving Illinois, this [bill] could have some significant impact on small businesses, who may decide to go elsewhere,” she said.

In anticipation of the Illinois House’s vote on the bill, Huntley Area Chamber of Commerce Executive Director Sunday Graham sent out a survey to Chamber members to understand how local businesses may be affected and what the Chamber can do to support them.

“To echo what businesses have been saying, there’s concern about viability and how [businesses] will manage this difficult level of expense where it may not make sense to have that type of wage,” Graham said.

The bill was passed in the House by a vote of 69-47-1, with state Reps. David McSweeney, Steve Reick, Allen Skillicorn, Tom Weber and Dan Ugaste voting against it. With the bill already passing in the Senate last week, it now will be sent to Gov. J.B. Pritzker to sign.