On July 24, about 11,000 Georgia workers will get a welcome pay raise. That's the number of workers in the state who earn the federal (and state) minimum wage. The rate is increasing from $5.85 to $6.55 an hour.
The hike will directly affect minimum-wage workers, as well as 59,000 Georgians who make less than minimum wage (mostly workers who also receive tips). It also could spill over into higher pay for workers who earn slightly more than the minimum rate. About 2.2 million workers in Georgia are paid based on an hourly wage, with the vast majority (96.8 percent) making more than the federal minimum.
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| Beth Van Loon, human resources director, McDonald's USA, Atlanta region, said that many workers get their start at McDonald's restaurants but receive training and opportunities to move up. | ||
 LEITA COWART/Special | ||
| 'A higher minimum wage could have a ripple effect of raising everyone's pay,' said Melissa Hulsey, owner of Ashton Staffing in Kennesaw. | ||
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| 'Education is the key to workers' moving out of minimum-wage jobs, and Georgia is a state that tries to educate as many people as possible,' Don Sabbarese, director of the
Econometric Center. | ||
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This year's raise is part of a three-phase minimum-wage increase that Congress passed in May 2007. The rate rose from $5.15 to $5.85 last July, increases to $6.55 this summer and will go to $7.25 on July 24, 2009.
The Fair Labor Standards Act set a federal minimum wage of 25 cents in 1938. The rate has been amended many times to bring it more in line with inflation and the national cost of living.
The 2007 increase was the first since 1997. In that time, the cost of living had risen by 26 percent, causing the minimum wage to fall significantly in real value. Adjusted for inflation, the 1997 rate was at the lowest level it had been since 1955, according to the Economic Policy Institute's (EPI) guide to minimum-wage issues.
Historically, the rate has risen by discrete increments (8.5 percent in 1997, 12 percent in 1991), not as part of a multiyear plan, noted Roger Tetterow, professor of economics at the Atlanta campus of Mercer University.
"A 40 percent increase over a two-year period is a pretty big jump and may represent proponents of the increase trying to play catch-up, since there had been no increase in 10 years," Tetterow said.
Poverty line for families
While the pay boost will help America's lowest-income workers, some wage-earners who support families on that salary still will fall below the federal poverty level ($17,170 for a family of three in 2007), according to the EPI. Its research shows that the earned income tax credit and food stamps, in conjunction with the 2009 wage increase, will help more families rise above the poverty level, but regular increases to keep pace with the cost of living would be necessary to keep them there.
"No one would argue [against the fact] that it's very hard to survive on $5 to $6 an hour, especially in this economy," said Don Sabbarese, director of the Econometric Center at Kennesaw State University.
Not all who work for minimum wage are supporting themselves or families, however. About half of minimum-wage earners are younger than 25, according to the U.S. Department of Labor. Many are high school and college students who work part time. Others have minimum-wage jobs to supplement family income.
"For a lot of people, a minimum-wage job is a first job. It's where workers learn how to work, and that job should open doors to better-paying jobs," said Sam Hall, director of communications at the Georgia Department of Labor.
Starting out
First-time workers often get their start in restaurants, tourist attractions, retail stores and hotels — the leisure and hospitality industry accounts for about 12 percent of minimum-wage jobs — where "a smiling face, a good attitude and a willingness to work" are the main skills needed, said Beth Van Loon, human resources director, McDonald's USA, Atlanta region.
McDonald's long has been an employer of choice for first-time, part-time or secondary-job workers. With about 750 McDonald's restaurants in metro Atlanta — each requiring 40 to 70 servers and cooks — the restaurant chain welcomes many people into the work force.
"A large proportion of our crew members are high school students, but we also employ seniors, stay-at-home moms wanting to work at night, and people who want or need a second job. We tend to fit the bill for many who want to make some extra dollars," Van Loon said.
McDonald's employees can gain a lot more than a paycheck, however. Most workers in Atlanta are paid above minimum wage, and full-time workers receive medical insurance and disability benefits, Van Loon said, because the restaurant business is a highly competitive market.
"We hire a lot of people without experience, and we are proud of our training. It's been said that we train more people than the U.S. Army on any given day," Van Loon said.
Workers learn on the job and receive their first performance reviews and salary increases after six months if they are performing well. An employee who wants to move up could work toward becoming a swing manager, a store manager, a supervisor of several restaurants, a director of operations or a member of the corporate staff.
"We promote from within, and many of our senior people started out as crew members," Van Loon said.
Managers often attend Hamburger University in Oak Brook, Ill., (corporate headquarters) to learn the business and customer-service, financial and leadership skills.
"A lot of college students work with us to gain management experience," she said.
Some franchise owners help pay for employees' college tuition, and graduates often return and work for the company in higher capacities.
Because McDonald's can't serve its customers without a crew, "raising wages does affect the bottom line," Van Loon said.
The company took a proactive attitude toward the federally mandated increase to the minimum wage and began educating owner-
operators a year ago about how to plan for and absorb some of the costs.
"We don't want our employees to get a wage increase because the minimum wage went up," she said. "We want to reward employees for the work that they do, and we do that in many ways."
Impact on jobs
"How minimum wage affects aggregate employment and prices has always been a lively debate among economists," Tetterow said.
Some argue that higher wages mean fewer jobs or that companies will raise their prices for goods and services to offset labor costs. Others argue that workers who earn more have more to spend, which is good for the economy.
"With the market softening, the pace of job creation may be moderated, but it's hard to separate out the effects of higher minimum wages, rising energy costs and other factors that may compress profit margins," Tetterow said. "The general assumption, though, is that small businesses bear more of the burden of a minimum-wage increase."
A 2007 U.S. Chamber of Commerce survey confirmed that assumption. The chamber found that nearly 60 percent of small-business owners said they would not be able to offset the cost of the minimum-wage increase, which would lead to smaller profits. Nearly 30 percent of small-business owners said that they might have to raise prices in order to cover the increase, while more than 20 percent said that they would not be increasing their staffs as planned.
"The minimum-wage increase could be ill-timed, given today's economy," Sabbarese said. "We are in uncharted territory, with energy prices being what they are and other market factors affecting businesses. Some companies can raise prices, and others can't. It would be difficult for a company to raise prices on goods if it is already losing business."
While research on whether a minimum-wage increase has a positive or negative effect on the economy is inconclusive, both Sabbarese and Tetterow believe that Georgia will not be significantly affected for several reasons.
People who earn the minimum wage or less account for a small part of Georgia's work force (1.5 percent of all workers). The state has a diversified economy, with several growing sectors, such as health care, education, financial services and wholesale trade. And the state believes in job training.
"Education is the key to workers' moving out of minimum-wage jobs, and Georgia is a state that tries to educate as many people as possible," Sabbarese said.
Career development
"We are blessed with so many resources for career development in this state," said Melissa Hulsey, owner of Ashton Staffing in Kennesaw, which fills staff positions for industrial, clerical and medical fields and conducts executive placement. "If there is an individual who wants to better himself and learn skills to get a better-paying job, Georgia has the resources."
Hulsey's clients (from small businesses to Fortune 500 companies) all pay their workers more than the minimum wage, starting at $8 an hour.
She thinks the rate hike may push her clients' starting wage to $8.50 or $9 an hour in the future.
"A higher minimum wage could have a ripple effect of raising everyone's pay," she said.
Each person Hulsey places gets a brochure that lists all of Georgia's career-development resources.
"We have a great technical college system and a HOPE grant that pays tuition for residents. There's also the Georgia Work Ready Program, which helps workers test their skills, certify their competencies and get training," she said.
Other great resources are the Georgia Department of Labor Career Centers, which offer job-seekers free assessments of skills and referrals to training or apprenticeship programs for high-demand jobs in the state.
"Workers who are better-qualified are going to be able to command higher wages," Hulsey said.
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