Jan. 1 marks the next mandatory wage increase in California, with a rise to $10.50 for businesses with 25 or less employees and $11 for companies with 26 employees or more.
For small business owners in the Central Valley the increase makes a big impact.
“It definitely affects our overall payroll number,” said Tony Vice, owner of Fleet Feet Sports, which has two locations in Stockton and Modesto. “Costs continue to go up and we have to look for ways to offset those costs.”
To keep expenses low, managers are careful not to overstaff and keep employee hours tight. Vice also plans for a store size reduction after the New Year, taking his 5,000 sq. ft. Stockton store down to 3,000 sq ft., a decision he says makes sense now that Fleet Feet has two locations.
“It’s obviously a big impact when it comes to small business owners. At the same time I want to say that I want to provide a living wage for my employees,” Vice said. “I understand it. I agree with it. It’s tough and we just have to figure out ways [to offset costs].”
Vice’s employees include three full-time salaried positions and 14 part-time employees, mostly college students. He said the majority of staff is long-term employees and full-timers are being prepared for store ownership in the future.
On Jan. 1, Vice will raise employees’ hourly wage up to $11 to stay competitive even though he falls under the 26 employees required to do so.
He said Fleet Feet would not raise prices.
Lisa Espinola owns Glitz in Downtown Turlock. She has five employees, one full-time and four part-time. All are college students.
“To me it’s an entry level job. It’s not like someone is going to stay here forever and make it their career,” she said of the sales staff at her boutique. “This is just to help them get through college”
The extra cost is a huge hit to her bottom line. Espinola said she has no problem giving raises for merit, but doesn’t feel the government should mandate them.
Her fear is that manufacturers will also raise prices when hit with the wage increase, charging her more to make up the difference.
“At some point I’m going to have to [raise prices],” she said.