Seven decades after Franklin Roosevelt signed the law creating a minimum wage, each increase still sparks a version of the original debate. This week is no different.
The minimum wage rises Thursday from $5.85 to $6.55 an hour — part of a boost that will lift it to $7.25 an hour next summer — with many business representatives decrying the change while low-wage workers and advocates say it's about time.
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And not enough.
"If you work full time, you should not be living in poverty," said Cindia Cameron, Atlanta-based national organizing director of 9to5, the National Association of Working Women. "Work should be a way out of poverty."
The minimum wage is now about one-third of the average wage. It was about half the average wage during the 1950s and 1960s.
Yet in 30 states, Thursday's change is a yawner: They already have higher wage floors — the highest being California and Massachusetts at $8 an hour and Washington at $8.07 an hour.
In Georgia, the new floor matters: About 210,000 Georgians work for the minimum wage, according to a 2006 study by the Georgia Policy and Budget Institute. About 461,000 others, while making a little more than the minimum, would also likely get a boost because of the change, the GPBI said.
While that includes some teen workers, the vast majority are at least 20 years old.
For a full-time worker, Thursday's $28-a-week raise would mean a year's pay of $13,624. That is below the official poverty line for a family of three — and about one-third of the Georgians affected by the change are parents, according to the GPBI.
Since FDR, many businesses have argued that any kind of wage floor not only damages profits, by forcing companies to pay the minimum to even the least-experienced worker, but is actually counterproductive.
"Government price-setting has never been good for the economy, and they are setting the price of labor," said William Dunkelberg, chief economist for the National Federation of Independent Business. "If you want more people hired, you don't make it more expensive to hire them."
Labor accounts for about 70 percent of business costs — even more for small businesses, Dunkelberg said. Multiply each hour worked by each worker and a modest increase adds up to trouble, he said: You force companies to either take a smaller profit or pass along the added costs to their customers. "There is no free lunch. It is coming from somewhere."
But that is a narrow view, argued Holly Sklar, director of Business for Shared Prosperity, a network of executives and businesses that support a higher minimum wage.
Higher wages are actually good for the companies that pay them, as well as for the overall economy, she said.
"What people forget is that workers are not just workers, they are customers," she said. "Higher pay reduces employee turnover, and that reduces costs."
Economists have studied the issue for decades with varied results. And while studies do not show dramatic job loss because of the wage, even advocates acknowledge that, for a business at the edge of profitability, higher costs do hurt.
Still, they argue that — in an era of soaring energy prices — the problem is much broader. "Jobs are being lost, but that has to do with the economy and very little to do with wages," Cameron said.
Moreover, when the economy was growing more robustly, minimum wages were not raised, so there is some catch-up to do, she said.
The minimum wage should at least keep up with the overall economy, she argued: American productivity has grown 83 percent in the past three decades.
Adjusted for inflation, the median U.S. wage has gained only slightly in that time. But the minimum wage has done even worse, falling 22 percent.
"What is really wrong is that American workers have not been sharing with the growth of the country," said Bruce Raynor, president of UNITE HERE, a New York-based union that represents hospitality workers, including 7,000 in Georgia. "To match the buying power of the minimum wage in the 1960s, it would have to rise to $9 or $10 an hour. I think this is an important, small step."
The law will affect an estimated 2 million workers directly, more than half of them full time, he said. He dismissed the idea that a higher minimum means job loss as "pure nonsense."
No — but it's not layoffs so much as jobs that are not created, said Jackie Kinlaw, owner of Quik Cash Pawn Shops in Sugar Hill and several area convenience stores.
Both those businesses face ceilings on revenue — the legal limits on loans at one, reluctance at the other of cash-strapped customers to pop for chips or beer after they fill up their gasoline tanks.
That leaves his companies scrambling to trim costs.
"You've got to have some people, but you can have less people," Kinlaw said. "That is something you can control."
With a full supply of experienced job candidates, the most likely to lose out are those with no experience, he said. "If I've got a kid who is learning, I may be ready to do that at $5 an hour. At $7 an hour, I'm not willing to do that."
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Comments
By ssssssss
Nov 19, 2008 10:15 AM | Link to this
sss
By Chelsea Perez
Aug 29, 2008 2:18 PM | Link to this
Hey y do we have minimum wage
By Bill
Aug 28, 2008 8:57 PM | Link to this
I'm going to make my stance very simple and I'm not going to put a bunch of big words in it to sound smart or important.
Minimum wage and pay in general is supposed to have a standard cost-of-living fluctuation. With the way gas prices are, this should have been done years ago.
I know quite a few people with minimum wage or near minimum wage jobs that barely have $75 or even $50 after paying for the gas that has to get them back and forth to work.
By Ramblin'Wreck
Jul 24, 2008 2:00 PM | Link to this
cliffbearton:
First off, I have worked a minimum wage job. For years actually. All through high school, college, and 2.5 years after I graduated I worked at a fast food restaurant. So please don't tell me I'm being judgemental when you're incorrectly pointing fingers at someone who HAS been there.
Secondly, don't pretend that the rest of the world has higher pays that in the US. That's just ignorant to suggest that. How is it that China has cheaper labor if they pay so much better? Mexico? Thailand? Phillipines? Funny that in the Phillipines, people are willing to work for and live on FAR less than we are in America. There are less jobs there, so the job is in demand while there is an abundance of willing workers. Thus, cheap labor. Minimum wage eliminates that part of the equation, and so we outsource our jobs. I'm completely fine with outsourcing. It provides a job to a person in another country who is willing to WORK for their EARNED wage where they wouldn't even have the opportunity to work otherwise. It's that all of these companies are so calculating that they will work their employees to death. It's that the minimum wage causes complacent workers to receive a wage they don't earn. It lowers productivity while raising labor costs, thus inflating costs and diluting the value of the dollar. It's sad that you don't think these things through yourself. You can call me what you want, but at the end of the day, I've been there. Have you? I can talk from experience, can you? As a person that has worked hard from the ground up, I know that I have EARNED my wage, have you? Or do you feel entitled to a higher wage? Do you feel that being American gives you right to a certain lifestyle regardless of what you do? I think that is the self-centered attitude that needs to be looked at.
By BexB
Jul 24, 2008 1:51 PM | Link to this
Minimum wage isn't supposed to be for someone supporting a family of three. Those people should get training and get a better job. They're available if only you try hard enough. Try being manager of a Burger King, not just a cashier. Get motivated and get a better job. The economy will not get better because of this, only worse. Because all prices will rise, but not everybody's paychecks will. Just because these folks get $0.70 more doesn't mean anyone else will. So those folks will spend less. Min wage jobs are for high school students and supplemental income. Anyone who expects to make fries for a living apparently doesn't want to earn more. Do you really want the bad-attitude 40 year old lifer at Arby's making almost as much as you? Heck no. You want to know that your striving to achieve more has earned you a better job and better pay!
By Ramblin'Wreck
Jul 24, 2008 1:43 PM | Link to this
Jake:
Answer this: A burger flipper, how many people can do that job? How many millions of people are qualified? Now, an engineer. How many? Which one is easier to replace? A doctor? Because there are requirements stating that you can't operate as a doctor UNLESS you have the appropriate training, not just anyone can do it. Almost anyone can flip burgers at minimum wage. It's that the engineer or doctor is any more important that burger boy, but just simply based on the training and knowledge that has been obtained, the professional position is more difficult to replace.
Beyond all of this, if a company is only willing to pay me $X to flip burgers, then my value to the company is what they are willing to pay me. By forcing labor costs up, production cost goes up. The guy flipping the burger is more costly to the company, the guy packing burgers into a box to be shipped is more costly, the guy slaughtering the cow is more costly, the guy feeding the cow is more costly, etc., etc., etc. It's a HUGE reason why inflation is as high as it is.
I would say raising the min. wage is common sense on the surface. If you don't bother yourself to think about the big picture, it's common sense. I challenge you to think about the whole situation from other angles than your own. As a business owner, what happens? As the indirect supplier, what happens? From the millionaire's perspective, what happens? From the minimum wage employee's perspective, what happens?
It's a domino effect of increasing costs, and diluted dollar worth. It's common sense not to have a minimum wage, but to simply pay people what the company feels they are worth. The people who perform will get raises. The people who don't, won't. The free market has an amazing way of regulating itself.
By cliffbearton
Jul 24, 2008 1:20 PM | Link to this
I guess the people that make your food at a fast food place are all just lazy bums huh? Maybe you should shut up until you have been in one of those jobs or worse yet been forced to work one of those jobs because the job you normally do has no openings in your area. T simply act like its the fault of the employee that the employer wants to take all the money and run is as self-centered as anything could be. This country has one of the worst labor situations in the world. Other places require higher pay, insurance, vacation, etc. Or maybe you just want to work these people till they are sick, can't get medical care and die so your greedy self-centered you know what can have more by living off the backs of those who do work. Show respect to people you loser - its sad that someone has to tell you that.
By Ramblin'Wreck
Jul 24, 2008 1:18 PM | Link to this
Brandon:
The wage isn't communism. Taking money from a company and redistributing it to the "poor" is communism. What defines a communist society? They live as one COMMUNE, hence the name. It's not as if I feel being poor makes you any less of a person, but being rich shouldn't make you more of a money target either. Why should the government put a cap on how much money you can make? Should the gov't also tell companies what they can and can't charge for their services?
The issue isn't that the person is making more money. It's the simple fact that EVERYTHING will now be more costly FOR EVERYONE. It won't really effect the wealthy in any adverse way, but it WILL effect the people are making minimum wage. That one dollar will simply be eaten up in taxes, increased food prices, increased commodities prices, increased cost of living. Why would this happen, you ask? Simple. Every company exists for a simple reason: To make money/survive. If you increase their cost of production, guess what? The sale price goes up. You can raise wages, but you're not really doing anything but fueling inflation. The rest of the nation won't necessarily see the same 12% raise, but all goods will certainly go up. Thus, the rest of the nation's salary is effectively diluted.
By Jake Johnson
Jul 24, 2008 1:09 PM | Link to this
Before the battle over minimum wages was won, similar battles were fought over child labor laws and maximum work weeks. Business owners and heads of corporations made the same arguments: laws preventing the use of 12 year old children in factories and 60 hour work weeks would hurt businesses, and thus hurt everyone. Fortunately, these transparently deceptive arguments were seen through.
Raising the minimum wage is just common sense. It clearly needs to be raised higher. The problem with the argument that increasing the minimum wage makes it hard to do business is that this argument assumes that business owners have a right to make a profit, regardless of how that profit is made, and that it is the elected government's job to protect that profit by letting them do whatever they want, instead of protecting the larger body of citizens who elect that government.
Moreover, on a more day-to-day level, I can't accept the notion that the people who are paid minimum wage are those that have the least worth to the company. Take away the people who work at fast food restaurants and at shops and see how long these establishments survive: far from being the least important to the company, they are the most essential. They do the work that generates the income. Paying them a low wage is the very thing that allows the owners to thrive. Pretending to be beneficent, the givers of jobs, while in fact using these people's willingness to work hard for little money is a transparent ploy.
If a business, small or large, is unwilling or unable to pay people enough that they can eat and live in decent circumstances, and it must close down, then so be it. What is best for corporations is not what is best for the country. A few fewer millionaires, or just people making five or six figures while paying their employees as little as possible, would be fine.
By DanTheLowSkilledWorker
Jul 24, 2008 1:05 PM | Link to this
We all own the right to sell our labor in the USA. If I want to sell my labor for $5/hour, that is illegal now. How can anyone call this law just?
If I am a low skilled worker, without much job training, and I approach an employer who is only willing to hire me at $5/hour, because that is the wage at which he thinks I will be useful to him, how does making such a transaction ILLEGAL help me?
Instead of being hired, the law sets a "wage floor" (hurdle) of $6.55 so that the employer will hire someone else, who has more training, instead of me. This law has not helped me, but has instead restricted and reduced my FREEDOM TO SELL MY LABOR at any price I agree upon with a prospective employer.
I am literally priced out of the labor market. I could be forced to enroll in a welfare program instead of selling my labor at $5/hour and learning on the job. On the job training can only happen when I actually have a job.
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