Next month several hundred retail workers at Wal-mart, Target, TJ Maxx, Marshalls, and HomeGoods stores in the Toledo area will get a raise.

That will lead to other area retail workers’ paychecks getting bigger, experts predict.

“It’s kind of a domino effect. If one raises theirs, the other will have to,” said Mike Veh, a work force specialist who is senior manager of special projects for the Lucas County Department of Planning and Development.

“You always get what you pay for, and if you need somebody with better skills and need someone who’s a more dedicated worker, you’re going to have to pay them a little more,” Mr. Veh said.

Wal-mart Stores Inc. set pay raises in motion last month by announcing that new workers at U.S. Wal-mart and Sam’s Wholesale Club stores would get $9 an hour in April, and $10 an hour next February. In the past, new workers at Wal-mart typically have received the federal minimum of $7.25 an hour or the state minimum wage.

Just days after Wal-mart’s decision, TJX Cos., the parent of T.J. Maxx, Marshalls, and HomeGoods, said it too would bump starting wages to $9 an hour.

Then this month Target said it too would move to $9 an hour for new hires beginning in April.

As major players in retail, the recent decisions by those three companies — and earlier pay rate increases by Gap Inc. and Ikea — likely will have a major effect on industry wages.

Experts say $9 an hour will become the new standard for retail wages, and competitors will have to match that or face a harder time obtaining the better workers.

Jack Hollister, president of the area’s Employers’ Association, said area employers are already expressing more concern about finding and retaining better workers.

“There’s a tremendous amount of competition for good workers,” Mr. Hollister said. “The economy has come back, and there’s a lot of competing going on for the folks who are in the $9, $10, or $12-an-hour range. I’ve never heard so many employers complain about having trouble finding people who can pass a drug test, get to work on time, and such,” he said.

Unemployment keeps dropping, which will make finding workers that much harder, Mr. Hollister added. In Lucas County the estimated jobless rate was 6.2 percent in February, down from 7.7 percent a year ago.

Mr. Hollister said he believes other employers are going to have to follow Wal-mart and raise wages.

“I think it’s inevitable that everyone goes to $9 an hour. I think it’s going to happen,” he said.

With $485 billion, $72 billion, and $26 billion in annual revenues, respectively, Wal-mart, Target, and TJX Cos. all can absorb a higher starting wage fairly easily.

But the move affects far more than just starting wages, according to Laurence Fink, a professor of management in the college of business and innovation at the University of Toledo.

“The biggest impact actually is on the people just above those making the minimum wage,” Mr. Fink said. “This is going to affect a larger percentage of the work force than people realize. The fact is, not a high percent are at the bottom. So this will affect the people above those new employees because [companies] will want to keep those people who have been there longer. The companies will want to move them up the pay scale too.”

That ripple effect, he said, likely will cause big headaches for small employers, the mom-and-pop businesses or fledgling chains.

Locally those small businesses typically pay their starting workers Ohio’s minimum wage of $8.10 an hour or in Michigan, $8.15.

If they don’t move to $9 an hour, “the mom-and-pops are likely to get lesser workers or have more trouble recruiting workers,” Mr. Fink said.

“They can pass raises onto the customers through price increases,” he said.

But a more likely outcome is that smaller employers may have to cut their work forces. “There will be winners and losers here,” Mr. Fink said.

Margins, profits hit

Gary Fitzpatrick owns three Learning Express toy stores — two in the Toledo area and one Ann Arbor. He said there’s no doubt the Wal-mart, Target, and TJX raises will affect his business and others.

“It effectively raises the minimum wage from $8.10 to $9. You either pay employees more to be competitive or you lose them, and that will affect margins and profits,” he said.

“I don’t see any way around it. Once word gets around on the street that Wal-mart pays $9 an hour people are going to want more than [the Ohio minimum wage],” he said.

“We’ll see over time what happens,” but he warned that small business owners “only have so many options. At some point, we might have to operate with less people.”

Mark Rodriguez, president of Toledo’s Hickory Farms Inc., said the new $9 an hour wage floor is going to put further pressure on some companies to select the best employees. Mr. Rodriguez said it already is tough given the shrinking unemployment.

“To retain talent, and manage rising wage expectations, some will follow with wage increases or face falling farther behind in the area of customer service, therefore putting more pressure on the need to acquire new customers,” Mr. Rodriguez said. “Others will chose to move defensively and only raise wages when it is apparent service or business is suffering.”

Mr. Veh agrees that when it comes to quality workers, “there’s not as many out there as there were a few years ago.

A few years ago an employer “had so many applications coming in that you could pick and choose the ones you want. You can still kind of find a warm body, if that’s all you want, but the good workers are getting harder to find. I have seen ‘For Hire’ signs up for a long time all over town. Some places can’t fill their jobs or keep them filled,” Mr. Veh said.

Family businesses

While a $9 an hour minimum wage will be tough for smaller businesses to match, such businesses can offer something big retailers usually do not: job flexibility.

“Family owned businesses can provide more flexibility in their scheduling. Smaller employers tend to be more nimble in that way. If it’s a good work environment, people will tend to stay,” Mr. Veh said.

Susan Baer, director of human resources for Bennett Enterprises, which owns area Ralphie’s and Frisch’s Big Boy restaurants, plus four area hotels, said her company pays the market rate, which is Ohio’s minimum wage.

But it sweetens the deal by offering full-time workers a benefits package.

“We can say that the strategy that has kept employee turnover low for Bennett Enterprises is to pay a market rate of pay, encourage full-time employment with solid training programs enabling our employees to enjoy a solid health plan, participate in a 401(k) with employer matching, earn vacation time, and enroll in short-term and long-term disability plans all while having opportunities for rapid advancement,” she said.

As a result, Bennett hasn’t experienced a mass exodus of employees to national retailers, Ms. Baer said.

Wage pressure higher

In its most recent Beige Book — a collection of observations that suggest developing economic trends — the Federal Reserve noted that in several regions of the country employers are starting to have trouble attracting and keeping workers and have been forced to raise their wages as a result.

“In particular, service-sector firms in the New York District noted increasingly widespread reports of wage hikes. Contacts in the Cleveland, Richmond, and Kansas City districts noted increased wage pressure due to the difficulty in attracting and retaining truck drivers. A staffing firm in the Chicago District reported some companies were also willing to raise rates for unskilled workers to reduce turnover, and contacts in the Atlanta District noted increasing entry-level wages,” according to the Beige Book, which is published about every 45 days.

Also, a recent Job Openings and Labor Turnover Survey report by the U.S. Bureau of Labor Statistics showed that employees in the retail sector are quitting at accelerated levels.

UT’s Mr. Fink, who has studied employee-compensation issues for more than 20 years, said that while the Wal-mart decision to increase wages drew a lot of praise, the retailer’s motives likely were not necessarily to benefit its work force.

“Wal-mart is a very intelligent organization and a market leader, so this will have an impact on other places, and there’s a lot of reasons to do this,” Mr. Fink said.

“A lot of retailers want to pre-empt any federal legislation that increases the minimum wage. This is taking a little of the gas out of this as a campaign issue,” he said.

“But we also know that with higher wages you attract better workers, have greater worker retention and productivity,” Mr. Fink said. “Everything nowadays is about the shopping experience. If you have workers that have been around a while and are motivated, customers are going to have a better experience.”

Wal-mart has been battered for years by criticism that it treats employees badly, Mr. Fink said. By raising wages, the company looks more benevolent and that makes it “more acceptable” to shoppers who had been reluctant to patronize Wal-mart, he said.

“The low-level workers really have been hard-pressed the last several years because there’s been a glut of workers. You were expendable,” Mr. Fink said.

But the situation is changing, he said.

“I’m not surprised by this. You knew that the market was changing, and the Democratic Party has moved far to the left [on wages]. This is going to be a campaign issue and a lot of Republicans also have talked about the need to get behind this,” Mr. Fink said.

Contact Jon Chavez at: jchavez@theblade.com or 419-724-6128.

First Published March 29, 2015, 4:00 a.m.