MERCED, Calif. (KFSN) -- The new year means a pay bump for minimum wage employees but customers could feel the cost.
Come January, minimum wage employees will get a 50 cent pay raise. Some North Valley businesses say this also means price hikes to cover the cost of the increase.
Employees at Paul's Place in Merced are rushing customer to customer as they take care of the lunch crowd. Come January, some of those employees will see a pay raise. However, hungry customers could also see one on their menu prices.
"We're bracing for that minimum wage increase," restaurant owner Paul Ybarra said. "Menus are being printed right now."
New state laws will increase the minimum wage from $10 an hour to $10.50 for businesses with 26 or more employees next year. It will eventually rise to $15 an hour in 2022.
Ybarra said he agrees that employees deserve to be paid more but says menu prices will go up to cover the costs.
"Our burger is about the price of the minimum wage," he said. "As minimum wage goes up, our burgers go up. So, when it hits 15 bucks, or $15, our customers aren't going to want a pay for a $15 hamburger. That's my concern."
He also says that with fewer customers coming in, there are fewer employees they can keep.
"In January, when it comes and that happens, we may have to lay some people off," Ybarra said. "Hopefully, that doesn't happen."
But other businesses in Merced say it could be a good thing. They say the more money employees get, the more dollars that could go Merced's economy.
"It'll be a great boost to local businesses, small businesses, medium businesses where people will have more money to possibly shop and spend locally," Christina Macha with Christina's Boutique said.
Ybarra says, hopefully, the short-term price hikes won't be hard for customers to swallow.
"Most items go up 20 to 25 cents," he said.
The minimum wage law goes into effect on January 1.
Valley business owners say customers may feel cost of minimum wage hike