On paper, it would seem the increase to the state’s minimum wage Gov. Arnold Schwarzenegger signed into law this fall would have only mild effects on small business owners. After all, the total increase of $1.25 an hour only amounts to an average load of laundry and is phased in over a year from the current $6.75 to $7.50 on Jan. 1, 2007, and $8 in 2008. That $1.25 an hour might not amount to much, but there are growing signs among small business owners that the total amount an additional $2,600 per employee each year is a hard pill to swallow. One indication is at the Valencia investigation company California Fingerprinting Authority, where owner Lance Wilson said business has substantially increased since September, when the law was passed. The company, which Wilson founded just a year ago as a live-scan fingerprinting service, had been completing 40 to 50 cases a week this summer. After the law was signed, it zoomed to 75, then 100. Wilson reasoned the additional $1.25 has made small business owners more cautious about investing in sub-par employees. To address the concerns, some have turned to background checks to make sure new employees are worth the investment. “They don’t mind paying them more because they know they’re getting a better employee and they have the longevity of the employee,” Wilson said. Michael T. Hull, a regional advocate in the U.S. Small Business Administration, said that while it’s difficult to quantify the trend of companies vetting employees more intensely because of wage increases, there are indications it causes business owners to think twice about the type of employee they want to hire. Hull said that employers are more likely to want a better-trained employee if they’re paying more. The result is that minimum wage positions are becoming tougher and tougher to find, he said. “Some report that many minimum wage jobs are no longer offered as a result of the minimum wage increase as employers will no longer look to hire minimum wage earners with no experience but rather focus on experienced employees only,” he said. New hires Business has also been steadily escalating over the past few years at InfoLink Screening Services Inc., a Chatsworth company that specializes in background checks, drug tests and employee verifications. But company President Barry Nadell said he’s not sure that’s because of the minimum wage increases. “It’s an interesting thought that a company wants to be cautious because they have to pay people more,” he said. “If that’s driving things, great.” Instead, Nadell thinks his business has been building simply because more employers become more cautious about whom they hire. “People understand that in order to make an intelligent hiring decision, they need more information,” he said. “It’s just commonplace.” Jonathan Goldhill, CEO of the Woodland Hills business advisory firm The Growth Coach, said it makes sense that employers would be more apprehensive about hiring the wrong person given the additional costs associated with the wage hike. “The more money that employers are going to invest in employees, the more they want to know they’re investing their time and money into someone who’s going to be around for the long haul,” he said. “I’m not surprised.” Regardless of the causes, this much is clear: business is booming for Wilson. He opened a Bakersfield location a few months ago and plans are in the works to expand into the San Fernando Valley. Wilson credits the success to the minimum wage change. “We’re seeing an increase in interest,” he said. “We’re seeing an increase in everything.”
