Volume 42, Issue 3 - March 2007

Contract Glazing
Will Minimum Wage Hike Be Good for Glass Companies?

In January the House of Representatives approved the first federal minimum wage increase in nearly ten years. The bill raises the minimum wage from $5.15 an hour to $7.25 an hour over the next two years.

Some opponents of the increase have said it could have a negative effect on the economy, as well as small businesses, such as some glass companies.

Andy Morris, president of Canton Glass Inc., a commercial contract glazier in Canton, Ohio, thinks a minimum wage increase will definitely be good for the economy.

“I think the more that goes into the market, the more people spend,” Morris says. 

Doug Steele, owner of Steele Glass & Mirror, a small glass business in Des Moines, Iowa, says he doesn’t think changes in minimum wage will affect his business. “I just have two employees,” he says, “So I don’t think it will affect us personally.”

Steele does acknowledge that the wage increases may prompt some prices increases. 

Michael LeGault, president of Southern Glass Co., which does residential and commercial glazing in Mobile, Ala., says the impact of an increased minimum wage on a company really comes down to the size of the firm. Large companies with many hourly employees are likely to be most affected, but smaller one’s will feel fewer repercussions.

“With smaller shops it’s probably not that much of an issue; at our company, for example, we only hire one, maybe two, hourly employees, and we do hire employees with [little to no] experience and train them,” LeGault says. “Most other companies only want to hire those with lots of experience.” LeGault doesn’t expect the new law to force him to cut staff or limit future hires because he only hires an occasional hourly worker. 

The wage hike won’t help undocumented immigrants who do hourly work, however. “In some cases they may not even be making minimum wage … there’s a burden then that falls on those of us doing the right things,” LeGault says. “It puts a lot of stress on the economy and us taxpayers.” 

Increase in Nonresidential Construction Expected in 2007 

The nonresidential construction market is expected to increase by almost 7 percent this year in inflation adjusted terms, following nearly 6 percent growth in 2006, according to the American Institute of Architects (AIA) semi-annual Consensus Construction Forecast. 

With balanced growth in the commercial/industrial and institution sectors, the report forecasts strong construction activity in office buildings, hotels and health care facilities.

“Unless there is a significant downturn in the overall U.S. economy, the prospects for nonresidential construction activity are very favorable,” said AIA chief economist Kermit Baker, PhD, Hon. AIA. “The high level of projected activity will help offset some of the effects of the slumping residential market.”

According to the report, the following segments are expected to grow this year: Commercial/ Industrial
• Hotels: 13.1 percent;
• Office buildings: 9 percent;
• Retail: 3.5 percent; and
• Industrial: 5.4 percent.

Institutional 
• Hospitals and health care: 6.8 percent;
• Public safety: 4.5 percent;
• Education: 4.2 percent;
• Religious: 2.6 percent; and
• Amusement/recreation: 9.9 percent.

The costs to actually build in these sectors should slow down in 2007. 

“Oil prices have been moderating, and the large spikes in building material costs seem to be behind us for this cycle,” Baker said. “However, prices for asphalt, copper, steel, aluminum and cement remain much higher than a year ago.” www.aia.org


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