(The Center Square) – The first increase in Virginia’s incremental minimum wage hike will go into effect this Saturday, when the hourly minimum goes from $7.75 to $9.50.
An incremental increase was passed by the General Assembly last year. It increases to $9.50 later this week and then to $11 per hour Jan. 1, 2022. It will increase again to $12 per hour Jan. 1, 2023.
The General Assembly initially planned the first increase to go into effect in January of this year, but opted to delay its enactment until May because businesses were suffering from financial losses caused by the COVID-19 pandemic and the subsequent economic restrictions.
Although the restrictions have since been eased, some business groups have warned that many businesses are still struggling to meet financial obligations. Nicole Riley, the Virginia State Director for the National Association of Independent Business, told The Center Square some of her members are concerned the new requirement will add more burdens when they are still trying to recover from the pandemic.
Some industries that were hurt the most by the pandemic will also be the industries most impacted by the minimum wage hike, Riley said. This includes nonessential retail, hospitality, travel and lodging, which she said have suffered disproportionate losses from the restrictions. Many of these businesses often hire people with low skills or little experience at lower wages when they are first trying to get into the workforce, she added.
If a business cannot afford to hire workers at the new wage, they may be forced to lay workers off, give them fewer hours or increase prices to make up the difference, Riley said. The increase also fails to account for cost-of-living differences, and other regional differences throughout the commonwealth, and instead puts everyone into a one-size-fits-all policy, she said.
Wage hikes at the base level can also lead other workers to request wage increases, which will also put a financial strain on businesses, Riley said.
The increase has received support from some businesses that already guarantee workers a $15 hourly wage. Alan Smith, a co-owner of Lamplighter Coffee Roasters in Richmond told The Center Square his business already sets a $15 base pay because he believes “everyone deserves to make a living wage.”
Setting a statewide standard will require other businesses to compete more evenly with those that are already paying their workers that much money, Smith said. He said it will help small businesses by putting them on a level playing field, rather than hurt the industry.
Smith said increasing a worker’s salary won’t necessarily be easy, but that they will have to build those changes into their business model. This could require a business to make changes to their current model and could require them to increase some prices, he said.
The legislation includes contingent language to increase the minimum wage to $13.50 by 2025 and to $15 by 2026, but further legislative action would be needed for this to go into effect. If the legislature does not act, the $12 minimum wage will be tied to inflation. The bill also requires three agencies to conduct a joint review into the impact of a potential regional minimum wage increase.