"There's only a certain amount of payroll you can afford," said Rusty Adcock, owner of Brookhaven's Rusty's Family Restaurant. "We can't keep going up on prices in proportion to wage increases - the market just won't stand it."
The federal minimum wage level increased Friday to $7.25 per hour, but Adcock began paying his minimum wage earners the new amount at the beginning of July.
After one month of the increased wages, he said his profits have taken a hit, and there is little he can do to recover. With the economy encouraging many people to avoid dining out and cook at home to save money, increasing the price of meals at Rusty's would only further reduce the customer base, he said.
Adcock also complained the federally mandated increase kills competition in the workplace. He said his employees always start low and earn their way to higher wages.
"If an employee wants to make their way, they're going to work harder and an employer is going to increase their pay," he said. "Work is a privilege. (Friday), a minimum wage earner will get a 70-cent raise for doing nothing, while a veteran cook in the restaurant will get nothing. What's fair about that?"
Since they are able to receive tips, waitresses are governed by a different pay scale. But cooks and other restaurant workers are covered by wage laws.
Fish Fry owner Wayne Boyte called the minimum wage increase a hidden tax, pointing out that insurance, workman's comp and Social Security contributions will also increase alongside wages. He expects the increase to cost his business around $250 per week in profits and to increase his insurance premiums by $1,000 per year.
As business owners like Adcock and Boyte struggle to pay the extra wages, the only option could be to terminate some positions. In Southwest Mississippi, the dilemma affects far more than just the food service industry.
"Mississippi is 50th in terms of per capita income, so you have to guess we have lots and lots of minimum wage workers," said Mike McIntyre, chairman of the Business Division as Copiah-Lincoln Community College. "It will be great news for those people who can still be employed, but bad news for those who could lose their job."
Increases in minimum wage are traditionally met with temporary layoffs, McIntyre said, and it takes time for those jobs to be restored. Unemployment in the country currently stands at around 9.5 percent, he said, and more layoffs are not what the economy needs.
"With the minimum wage going up, that's sort of counter-productive," McIntyre said. "I know it would be better for the workers to get a higher wage rate, but it's actually going to cause that unemployment rate to rise, and we want to be going in the other direction. It's probably a bad time to do that."
The minimum wage increase could also cause product prices to increase, McIntyre said. He said most of the price a consumer pays for any product is to cover the costs of wages and salaries, and the minimum wage level has a large effect on those prices.
"That's why it's hard for us to compete as a country when it comes to cheap labor," he said. "We don't have cheap labor because the government puts that floor under labor."
The increase does have a good side, McIntyre said.
Though it hurts business owners, without minimum wage levels, no one would make any money, he said. Increases to minimum wage are one way the American government, in the country's mixed capitalism economy, encourages employment, stabilizes prices and promotes economic growth.
"If there's no minimum wage, that wage rate is going to be extremely low if you don't have a lot of competition between businesses," McIntyre said. "The owners of those businesses controlling those markets become fabulously rich, set the conditions and the laborers will be earning close to subsistence wages. One of the reasons the government sets a minimum wage is to boost the incomes on that end of the scale - to make the poor a little less poorer."
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