WASHINGTON, DC — The salaries of part-time and full-time hourly workers at health clubs will likely be affected over the next couple of years after Congress approved last month a bill that will increase minimum wage almost 30 percent from $5.15 per hour to $7.25 per hour.
The bill's passage will raise costs for small businesses that pay minimum wage, but many small businesses already pay above minimum wage, so it will have less effect on them, says Mike Stamler, a spokesperson for the U.S. Small Business Administration.
Michael Nelson, president of Bodyworks Family Sports Centers in Lubbock, TX, says his four clubs will be affected by the bill's passage. Texas is one of 20 states that adhere to the federal minimum wage of $5.15.
“The minimum wage increase affects a town like Lubbock a lot more than it probably would a Dallas or Chicago,” says Nelson, who adds that Lubbock has one of the lowest costs of living in the country. “With the lower wage base as a whole, we are limited in what we can charge for a membership. We can't charge what they charge in Houston or Dallas or Austin for a membership, especially if you want to provide any service.”
Thirty-three states already have a minimum wage higher than the current federal minimum wage, and seven states' minimum wage is higher than $7.25, according to the Economic Policy Institute, a research group. Those seven states are California, Connecticut, Massachusetts, Oregon, Rhode Island, Vermont and Washington.
The House passed the minimum wage bill by a vote of 348 to 73. The Senate passed the bill by a vote of 80 to 14.
The bill will put in place $4.84 billion in tax breaks to help small business owners who might be affected by the federal minimum wage increase, which was added to the bill that provided funding for the military in Iraq and Afghanistan.
After the president's expected signing of the bill, the first increase in minimum wage in 10 years would occur in three stages during two years. The first stage in the minimum wage increase — from $5.15 to $5.85 — will go into effect 60 days after the president signs the bill.
By September 2009, the number of states with minimum wages above the federal level will drop from 33 to 12, with several states tied with the federal rate of $7.25.
Some of the issues that Nelson will be dealing with at Bodyworks, which has 21,000 members total, include keeping solid staff workers at an hourly rate that's appropriate for them yet higher than newer staff members who are making the new minimum wage rate. Nelson might have to raise membership dues to accommodate the increase in payroll, and that may prevent a certain segment of the market from joining his club, he says. The increase might also detract from the number of people he can hire for services such as kids clubs that don't bring in revenue, Nelson says, and one particular kids club of his may have to be cut.
“We have a 90-day probationary period for any new staff person,” Nelson says. “If they stay with us, then they begin to get merit raises. It's not the people who have been with us for a while that concern me, but it's for the new staff people. You're going to have to hire at a lot higher payroll rate before you know what you're getting, which is going to make it harder to hire. Sometimes you may hire two people to see which one works out the best. With this [wage increase], you're going to end up hiring just one person and hope that they work out. It's going to slow down the overall quality of the initial service that we get out of first-time, frontline staff people.”
Besides Texas, the other 19 states that currently have a $5.15 minimum wage, according to the Economic Policy Institute, are: Alabama, Georgia, Idaho, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Nebraska, New Mexico, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Utah, Virginia, West Virginia and Wyoming.
A spokesperson for the International Health, Racquet and Sportsclub Association declined to comment on the increase, stating that it does not take a position on minimum wage increases because clubs have different views about the issue.