New Year's bonus

The Daily Inter Lake

When the clock strikes midnight tonight, some workers at the bottom of the pay scale will ring in more than just a new year. They'll also welcome a $1-an-hour raise, when the state's minimum wage increases to $6.15 an hour.

It's the first minimum wage increase in a decade, when Congress established the current $5.15 an hour. From now on, Montana's minimum wage will be adjusted annually according to the consumer price index, a cost-of-living measurement based on data from the country's 87 largest cities.

Small business owners across the state are concerned those annual adjustments will be too expensive. Some anticipate upping their prices or cutting employees' hours in an effort to make a profit when the new wage takes effect.

Those things are happening in Northwest Montana. But in the Flathead, where a tight labor market has driven most wages well above the minimum already, most employers anticipate the increase's initial impacts will be minimal.

"Most people in this valley, anybody worth anything, is making more than minimum wage," said Kevin Pitt, general manager of North Bay Grille in Kalispell. "The only positions that's really going to affect are the tips positions."

Mike Shoquist, manager of the Northwest Montana Workforce Centers, agreed.

"From what I've seen, I think the area that will probably see the most [impact] will be in the motel, possibly, but mostly in the restaurant kind of work," he said.

Few jobs in the state's northernmost counties pay minimum wage, he said. As of Wednesday, the job service in Kalispell had one listing that paid less than $6.15 an hour. Libby had two and Polson had five.

The job service in Thompson Falls doesn't have anything below the new minimum wage, Shoquist said. On Wednesday, the lowest-paying wage was $7.25 an hour.

Nine percent of the state's total workforce - about 25,000 people - make less than $6.15 an hour, according to the Montana Department of Labor and Industry. Across the state, over 10,000 workers at restaurants and hotels make $6.15 an hour or less.

Many are eager for the raise to take effect.

"I think it's great, because I do not get tipped out," said Nicole Winter, a hostess and busperson at North Bay Grille. "It means more money for us and for everyone."

Servers will see the biggest gain, she said.

"It's going to be good for the waitresses, because they still make their tips and everything," she said.

Montana is one of six states that does not allow a tip credit, which enables employers to pay tipped employees - those who regularly take home more than $30 a month in tips - less than minimum wage. The federal hourly wage for tipped employees is $2.13 an hour. The theory is that employees will make up the rest in tips.

Pitt said he believes Montana needs to consider a tip credit so restaurants can afford to stay in business. Even the $1 hike already has proved expensive.

"For us as a business, it will cost upwards of $25,000 to $30,000 a year," he said.

He's seen tip credits work effectively, he said. As a server at an East Coast restaurant, he earned $1.90 an hour - but took home $200 a night in tips.

"I think that's what they need to look at if they want to really look at this wisely," he said.

In the meantime, employers have other solutions for their increased payroll demands.

In Lakeside, Homestead Cafe Bar & Casino plans to expand its dining area to justify paying higher wages. The restaurant currently can seat 52 people, manager Lori Bryden said. When the remodel is completed in March, the capacity will be 86.

Very few of the restaurant's 12 employees actually made $5.15 an hour, Bryden said. Most started at $6.

"Basically, it's not going to change that much for us," she said of the new minimum wage. "I'd already implemented a larger increase in pay as it was, so it's not going to have that much of a bearing."

She is worried, though, that the wage hike will impact future hires and create discontent among existing staff.

"The only thing I feel guilty about is here's my push point to keep employees: I start out employees better than minimum wage. Well, that's not going to be the case anymore," she said.

"I think it's going to snowball down the line. The cooks start out at $10 an hour. Well, when the waitresses are starting out at $6.75, then they get their tips, they (the cooks) are going to start balking, I'm sure."

The restaurant will likely have to raise its prices, Bryden said. In Kalispell, Papa Johns has already done so. Prices went up about $1 last week, general manager Scott Brester said.

"Of course you raise your prices a little bit to compensate for paying more," he said.

It's a chain reaction, he said: Wages go up, so prices and delivery charges go up. When delivery charges go up, employers have to pay drivers more.

Evan Rindal started at $5.15 an hour when he began driving at Papa John's Pizza nearly two years ago. His wages have since increased, and with tips and $1.20 per delivery, he estimates he makes $14 or $15 an hour.

Even though he'll get a raise tomorrow, Rindal said he isn't a fan of the wage hike.

"I don't really like it," he said. "I get paid $6 an hour now. I have had multiple raises, and when it goes up, I have to start over."

Reporter Kristi Albertson may be reached at 758-4438 or by e-mail at kalbertson@dailyinterlake.com.