Businesses, employees start to tighten belts after first Va. minimum wage hike goes into effect

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Posted at 4:27 PM, May 03, 2021
and last updated 2021-05-03 21:02:26-04

VIRGINIA BEACH, Va. -- Thenew $9.50 minimum wage is the first step of a series of wage increases in Virginia. This first step does not worry Mike Madsen; instead, it is what is coming next.

“The second bump coming up in January to $11 an hour - that's going to be much tougher,” Madsen said.

Madsen is the owner of Windy City Pizza in Virginia Beach. He said his kitchen staff already make roughly $9.50, while his wait staff make the tipped hourly wage.

“Not only are we bringing people up from $9.50 to $11; now they're getting a lot closer to some of the people that have been here for years that are making, say, $11.50 or $12 an hour,” Madsen said. “If at the federal level they get their way and they raise the tipped wage, then we're going to have a whole other conversation."

Madsen said that means making tough decisions.

“Once that happens,” Madsen explained, “we're probably going to have to bump our prices up, so unfortunately, the customers are going to feel it."

In fact, the Norfolk-based Retail Alliance says that most small businesses answering a survey they are running have said they will need to raise the price of goods and services because of the minimum wage increase.

The survey results have not been disclosed as the survey is still active.

“It's readjusting to this new normal,” Dominick Miserandino, a business analyst, said. “How do you readjust your business?”

Miserandino said after minimum wage hikes, businesses have made adjustments to try to meet the new wage requirements. While the minimum wage increase may help, he added the question is not so much a financial one but a societal one.

“Some of the people I coach and advise are having trouble getting people at several wage levels,” Miserandino explained. “Some people with this pandemic are frustrated and tired and are not interested in taking certain positions anymore."

Madsen shares that concern.

"Now that the minimum wage has gone up, restaurants are struggling with staffing, and I don't think it's going to help a lot."

Virginia's minimum wage increase will continue to rise almost every year until it hits $15 in 2026.