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Home News Afro Briefs Originally published August 01, 2012

Some Black Businesses Fear Wage Hike

by Krishana Davis
AFRO Staff Writers

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    Terra Cafe, on the corner of 25th and St. Paul Street, attracts crowds young and old with it wide selection of foods that include items for vegetarians. (AFRO Photo/Alexis Taylor)

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Isa Olumefi lounges in a lime green booth, his laptop tuned into the 2012 Olympics’ basketball game. He has been eating at the quaint black-owned corner restaurant and coffee shop, Terra Café, for three and half years.

“People come here because it’s a black owned business,” said Olumefi. “I don’t think the price of the food makes a difference. It’s the atmosphere. I support cooperative economics and being able to spend my money at a black business.”

While one patron understands to the struggles of being black and owning a small business, owner Terrence Dickson fears other patrons may not be as sympathetic. The eatery, which sits on the edge of Charles Village on 25th St., has five to eight staff depending on the season including a few interns, who volunteer their services for no compensation. On average, Dickson’s staff earns between $7.50 and $12 per hour. But the America Rebuild Act which would increase the minimum wage by 27 percent could cause Dickson to have to lay off staff or hike up prices.

The American Rebuild Act endorsed by Senator Tom Harkin (D-Ia.) is set to increase the current minimum wage of $7.25 per hour by 85 cents per year for three consecutive years. The act also includes legislation to create jobs, change tax code regulations and increase the financial stability of the middle class in America, authorities said.

“Twenty seven percent is a dramatic increase,” said Dickson. “Where am I going to get the other 27 percent? Either hire less people and have them do more work or increase profits by 27 percent.”

Dickson, who acquired the property 14 years ago as a real estate investment, employees men and women who are mostly over the age of 30.

“This is a real restaurant. There aren’t a bunch of 16 and 17 year olds. We aren’t McDonalds,” said Dickson. “Big corporate business and chain food places make so much money that the wage increase won’t impact them.”

Lester Davis, a spokesperson for the Baltimore City Council President Bernard “Jack” Young, said small businesses have nothing to fear with the new legislation. Baltimore City Mayor Stephanie Rawlings-Blake and several city council members gave their support to the America Rebuild Act on July 24 at a press conference. They were joined by representatives from 1199 SEIU MD/DC, a union of healthcare workers, to support the increase for Maryland workers.

Rebecca Thiess, policy analyst for the Economic Policy Institute, an economic think tank in Washington, D.C., said, “There’s definitely an important economic concern when people discuss wages. This act would increase a boost in the economy and give people more money to spend…”

Thiess said the act would be especially beneficial to minority workers who on average earn less than their non-minority counterparts.

Northeast regional Senior Media Manager for the National Federation of Independent Business Jack Mozloom disagreed.

“You can’t wave a magic wand to increase your sales by 27 percent to meet payroll costs. You can’t wave a magic wand to decrease your costs by 27 percent,” said Mozloom.

Mozloom said that raising the minimum wage has only hurt the lowest paid workers, who now have to compete with middle class workers who are now “attracted to minimum wage” jobs. “They have the lowest education, the least amount of skills and they need entry level jobs to build those skills that they can go out and use later,” he said.



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