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Raising Minimum Wage Could Mean Layoffs, Business Owners Caution

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NEW YORK (CBSNewYork) — While 13 states, including New York, raised their minimum wage above the federal level Jan. 1, many workers and the White House are pushing for even higher pay.

However, as CBS 2’s Alexis Christoforous reported, some business owners say if that happens, they may be forced to lay off employees.

Last month, union groups helped organize protests among fast-food workers who believe the nationwide minimum should be higher. President Barack Obama wants to raise it to $10 an hour.

But Don Davey, a former NFL player with the Jacksonville Jaguars who owns 13 Firehouse Subs restaurants in Florida, says a jump to $10 could force him to raise prices or lay off workers. He pays most of his employees about $8 an hour.

“That’s a 25-percent increase in our labor costs,” he said. “Labor is our second highest cost as a business.

“We’d be forced to make a tough decision. We may have to close some locations. There would be 15 people laid off immediately if we close one of our stores.”

The National Restaurant Association also opposes the president’s proposal to increase the minimum wage, saying it will hurt businesses. Many Republicans in Congress agree and say they’ll vote against it.

But Jhordi Fernandez, a college student who earns minimum wage cleaning and restocking planes between flights at LaGuardia Airport, said even New York’s move to raise the wage to $8 an hour — above the federal level of $7.25 — does not go far enough.

“This raise will help out a little, but not really because right now, just by the thin of the line, I’m making it,” he said.

At the end of 2014, New York will increase its minimum wage again to $8.75 an hour, and then to $9 in 2015.

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(TM and © Copyright 2014 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2014 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)