Minimum wage hike takes effect across Virginia. What changes?

Published 2:43 am Tuesday, January 3, 2023

FARMVILLE – Some residents in Farmville and the surrounding area woke up Sunday to a slight pay raise. Virginia has joined roughly two dozen states in the new year, adopting a minimum wage hike. The increase, which went into effect Sunday, raised the rate to $12/hour, up $1/hour from Jan. 1, 2022.

This increase allows minimum wage workers to make $40 more per week, or $2,080 more per year. 

The minimum wage hike applies to most employees in Virginia, with some exceptions, including:

  • Full-time students putting in fewer than 20 hours of work per week
  • Individuals under the age of 18 employed by a parent or guardian
  • Any person under the age of 16 regardless of employer
  • Caddies on golf courses
  • Those employed as a farm laborer or farm employee

Virginia, unlike most states, does not exempt tipped workers from the state-mandated minimum wage. Tipped employees may be paid at the tipped minimum wage of $2.13 per hour, but an employee’s hourly wages plus tips must meet the state’s minimum new wage rate. 

Minimum wage hike hits small businesses

According to the Department of Labor, the new law is applicable to employers of four or more employees. Nancy Alexander, who serves as executive director for the Farmville Downtown Partnership, believes downtown businesses will be less affected by the increase than larger chains.

“Downtown retailers primarily are a little different from large-scale employers because they’re largely self-owned and operated businesses, and often only have one or two employees,” Alexander said. “If only. So I think the impact on smaller businesses is not the same.”

Caryn Kayton, who has operated Caryn’s Bridals and Tuxedos for 40 years in Farmville, says she had already raised her hourly wages for most employees beyond the minimum.

“When I first heard it announced that it was going to go up, I thought that the people who work for me deserve to make $15/hour, so everyone that works for me now — except maybe those who work just on Saturday — make more than that anyhow,” Kayton said. “I have a committed staff and we have higher-ticket items, so it’s easier for us to absorb that than it would for the smaller businesses.”

Still, Kayton says, she’s already seen the effects of the wage increases on her own pocketbook.

“When the labor goes up, the prices go up,” she said. “We went to Bojangles for breakfast, and for each of us, it was $2 more than it had been last Saturday. The fast-food places are definitely going to be affected because they have to pay minimum wage.”

Part of a longer process

The state’s minimum wage is set to gradually increase each year until it reaches $15 starting Jan. 1, 2026. The bills to increase the minimum wage were introduced in 2020 and advanced their way through the state’s General Assembly. 

Supporters argued Virginia was overdue for an increase, and better wages would stimulate consumer spending and employee productivity. Opponents argued the legislation would drive up inflation and cause job loss and small business closures. 

The concern for some business owners and lawmakers alike is the speed involved with this. For 11 years, Virginia had a $7.25 minimum wage. In less than two years, that jumped to $11. Now business owners are seeing a second jump less than 13 months after the first. The argument is that two sudden jumps like that are hard for some companies to adjust to, especially coming out of the pandemic. And as profits decline in a situation like this, businesses have to further adjust their own model. Sometimes, that means increasing prices. Others, it means having to lay off staff. 

Alexander, who used to own a housekeeping business, says she can see both sides of the debate. 

“I was asking people to do hard, physical work and be responsible in other people’s houses, and so I wanted to pay them more to be invested in their job,” she said. “So I structured my fee schedule to accommodate that. And I think that’s what is going to happen here. If a business owner is impacted by wages, they’re going to have to make that expense up somewhere, so they’re going to raise their rates.”

The federal minimum wage remains at $7.25 – it hasn’t increased since 2009.

 

Jennifer Holton wrote this story for The Farmville Herald.