EL PASO -- Bonnie Dominguez, the owner of Moe's restaurant, says she plans to raise menu prices rather than lay off employees as she contends with a minimum-wage increase for the third year in a row.

The higher wage is being welcomed by employees who say they need the money to make ends meet, but business owners such as Dominguez say the change will hurt their bottom line, as Texas is already in the midst of a recession. Dominguez said the costs will be passed on to customers, or employees will see their hours cut as businesses find ways to stay profitable.

The minimum wage increase took effect Friday, bumping the hourly pay of 10,000 El Pasoans to $7.25 an hour. After 10 years without an increase, the federal minimum wage went up to $5.85 in 2007 and $6.55 in 2008.

"Those workers that either have their jobs set at minimum wage or whose hourly wages are based upon the minimum wage will enjoy the benefits of the increase as long as they keep their jobs," said Tom Fullerton, an economics professor at the University of Texas at El Paso. "The question is, will more workers keep their jobs at the higher minimum wage, or will more workers fail to either keep their jobs or gain an entry-level position?"

For some workers who will benefit from the increase, however, the difference is painfully small. Lilly Ruiz, who is starting classes at El Paso Community College, said the additional money will be gone almost as soon as its arrives as she pays for school and groceries.


Here is a look at how the new minimum wage law will affect seven El Pasoans.

Irma Torres

Irmas Torres, 60, has worked for the county's nutrition program for the past three years as a driver delivering hot meals to needy residents.

Since her husband died five months ago, she said, she has exhausted most of her own savings on bills, rent and car payments.

"My paycheck is the only income that I have right now," she said.

In mid-August, Torres will start receiving Social Security. She said the higher minimum wage would provide immediate relief on bills while she is living month to month.

Torres holds one of five county jobs funded by outside grants that will go up with the new minimum wage.

All other county positions were adjusted prior to the wage increase.

Robert Barron Jr.

The owner of Barron's Superette, Rober Barron Jr. said higher labor costs could force businesses to oust less-productive workers.

He said his store was able to absorb additional costs without much trouble during the minimum-wage increase in July 2008. But now, with a recession, the East Side grocery will have to be more aware of the bottom line.

"We cannot afford to just have everyone work at the same slow pace," Barron said. "So everyone's going to have to produce."

Barron said he has told his employees as much in meetings. He said he was torn between keeping costs low and maintaining a commitment to customer service that requires more employees on the floor. While employees will enjoy the additional earnings, they have to remember that businesses need to make money to keep them employed, he said.

"They have to reflect that in their work. They've got to take some pride in the work," he said.

Barron said he would raise prices as a last resort, but he would also wait to see how his competitors respond.

"We can't price ourselves out of the competition," he said.

Gabriela Garcia

Gabriela Garcia, a senior at UTEP majoring in public relations, works at the Socorro Independent School District as part of a work-study program. She said the hourly minimum wage increase of 70 cents would provide instant, if slight, relief for commuting students.

"With all those trips to UTEP, we can definitely find ways to use it," she said.

Martinez, who lives on the East Side, drives about 30 to 35 minutes to campus to attend summer classes.

"Going everyday gets expensive," she said.

Bonnie Dominguez

The owner of Moe's Restaurant and president of the El Paso Restaurant Association, she said the increase forced her to make a tough decision: Lay off employees or raise prices.

Dominguez opted to keep her workers and perhaps pass on the additional costs to customers.

"I think that during these really challenging economic times, restaurants cannot absorb the increase in their payroll without it adversely affecting their bottom line," she said.

Dominguez could not say by how much she may increase prices until after the new wage kicks in and she sees how other restaurants respond. Restaurants may take other cost-cutting moves, like scaling back on employee hours, she said.

"We don't like to raise prices because it affects everybody," she said. "Sometimes it's the only thing we can do."

Lilly Ruiz

Lilly Ruiz, a crew leader at Premiere Cinemas at Bassett Place, said the wage increase was welcome but was woefully small considering the cost of needs like gas and groceries.

Ruiz, a recent high school graduate, begins classes at El Paso Community College this fall. She said she would try to maintain a full class schedule while working to pay for tuition.

Between costs for textbooks, tuition and essential such as and groceries, "the paycheck's going to be gone," she said.

Ruiz said the wage increase was welcome, but it would not do enough to cover inflation and rising tuition costs.

"It's like your minimum wage never went up," Ruiz said.

Fullerton, the UTEP economist, said purchasing power of the new minimum wage will be 34 cents higher than it was in 1997.

Angel Guzman

For Angel Guzman, a barista at The Percolator and UTEP art student, the wage increase will help pay for art supplies.

He said his overall spending is likely to stay the same after the wage increase.

"It's not enough to buy a house in the South of France, but maybe enough to go out once more each week," he said.

Guzman, who also holds a second job, lives with his parents and younger brother and helps pay for groceries every week. Guzman receives a full scholarship from UTEP, but his financial package does not cover the cost of art supplies such as paints and canvas.

"It will probably go to gas and school supplies, maybe clothing since I ruin so many clothes (doing artwork)," he said.

Nan Napier

Nan Napier, who owns Tres Mariposas clothing store, said she has already felt indirect cost pressures from the new minimum wage.

"It's more of an indirect increase in the whole expense structure," she said. "Everyone is kind of expecting to make more."

The new norm for employees making $10 per hour may be $10.50 because of the smaller distance between them and the minimum wage workers, she said.

Tres Mariposas was already focused on cutting expenses because of the economic climate.

"It makes it just that much harder," she said.

But some costs keep rising.

The minimum wage is going up more than 10 percent, and costs for the store's janitorial service are rising by 12 percent, Napier said.

Andrew Kreighbaum may be reached at akreighbaum@elpasotimes.com.