WASHINGTON-Tire dealers won't suffer any direct impact from the hike in the national minimum wage, according to a random poll of dealers across the U.S., since virtually all workers at tire dealerships and auto repair shops are paid above minimum wage. This Oct. 1, the minimum wage will rise 50 cents, from $4.25 to $4.75 per hour. Another 40-cent increase-to $5.15 per hour-will occur next Sept. 1.
But proportionate increases in pay scales and greater competition for workers from the available
labor force could well be secondary effects of the higher minimum wage, dealers said.
Connecticut preceded the nation in instituting a minimum wage increase, which led the Connecticut Small Business Federation to study the possible effects of that action, according to Anne Evans. She is president of Performance Services Corp., a tire dealership in Hebron, Conn., and president-designate of the federation.
``We went through our membership here, and discovered very few small businesses which pay minimum wage,'' she said. ``Minimum-wage jobs in Connecticut tend to be at supermarkets, or McDonald's, or similar places.''
Increases in minimum wage tend to affect young or unskilled workers, Ms. Evans said. But most tire dealers will not hire anyone under 18, and all the jobs at a dealership are at least semi-skilled.
``A tire dealer with a six-bay service center isn't going to hire unskilled workers,'' she said. ``If those lug nuts aren't tight, someone dies. In any case, most of them have ASE-certified mechanics, and those guys don't get paid minimum wage.''
Ron L. Martin, president of Martin Tire Co. in El Paso, Texas, agreed there will be no direct impact on dealers from a higher minimum wage, but the indirect effect on their wage scale will be significant.
``When the bottom rung of the wage scale goes up, the rungs just above it have to go up too,'' he said. ``Salespeople, managers and corporate officers won't be affected, but tire changers and mechanics will.''
``It will be a subtle change, but a significant one in expenses,'' he added. ``Net average earnings for dealers are extremely low, and their single highest expense is wages. When you raise those, you have to raise prices, or you don't stay in business.''
Wage increases at Martin Tire will take place ``gradually over the next year,'' according to Mr. Martin.
In general, larger dealerships will feel the change less than smaller ones. ``Our wages won't be artificially increased,'' said Mary Miles, director of human resources for Akron-based Tire Centers Inc., a 109-store, 1,600-employee dealership network. Where TCI will feel the pinch is in attracting workers, she stated.
``When the minimum wage goes up, so does the pay scale for less labor-intensive jobs than ours,'' she said. ``At $7.25 an hour, we're asking them to work much harder than they would at Wal-Mart.
``The other day, I saw a sign at the local Borders (book store), advertising a job at their espresso bar for $6.50 an hour-and that was before the minimum wage increase,'' she added. ``Some will say the people who'd work for us wouldn't feel comfortable working at the Borders espresso bar. But they might be comfortable at Wal-Mart's warehouse.''
Raising the minimum wage ``makes the labor pool that much more competitive, and it's pretty competitive right now,'' Ms. Miles said.
Tires Plus Groupe Ltd., the Burnsville, Minn.-based chain of company-owned and franchised dealerships, also said it expects little impact from a higher minimum wage.
``All our compensation plans are market-driven,'' said Trent Stoner, public relations and marketing ``coach'' for Tires Plus. All the company's entry-level positions are paid over the minimum wage, and most employees are ``teammates'' working together to maximize their compensation in a performance-based payment plan.
Mr. Stoner said people on the technical side ``would rather be working on cars. They get paid better getting their hands dirty than working in the friendly confines of a coffee shop.''
President Clinton signed the minimum wage increase Aug. 22. But its inclusion in an omnibus bill intended in general to decrease small business tax burdens makes it less painful, said Washington representatives for auto aftermarket associations.
Among other things, the new law allows small businesses a gradual increase in the amount they can deduct on their taxes for equipment purchases-from the current $17,500 to $25,000 in 2003.
It also extends the tax exclusions for employer-provided educational assistance and first-year wages for handicapped or minority hirees.