Amelia Mitchell says a bump in the minimum wage to $9 an hour would let her do more for her three children.
On her cashier’s pay of $7.30 an hour, the 30-year-old Atlantan says, “It’s a stretch – I can’t buy extras. But I’m okay with it because it’s so hard to find a job.”
If Congress endorses a proposal in President Obama’s State of the Union Address to boost the wage, Mitchell would eventually get that raise.
Yet many Georgia companies and business advocates contacted after the speech were adamant: It would be better for them and the economy if she doesn’t.
“We do not see this as a positive step,” said Matthew Loney, president of the 47-store Stevi B’s Pizza chain. He said a boost would hurt job creation. “Right now, we don’t have enough people working in this country.”
So while the president’s idea raised hopes among low-wage working Georgians, it raised hackles on the other side of the paycheck. Stevi B’s, for example, often pays minimum wage or slightly above to employees, many of them high school and college students.
About 490,000 Georgians – 13 percent of the workforce – make $9-an-hour or less. About 210,000 make a little more, so they could see slightly higher wages as well if the minimum goes up, said David Cooper, an analyst at the left-leaning Economic Policy Institute in Washington.
The president’s proposal would add $844 million to the wages of Georgia workers, said Cooper, who thinks that would stimulate a consumer-driven economy.
“Ask business owners what their number one problem is – it’s lack of sales,” he said. “Getting more money into consumer hands would be a good thing.” He conceded some of the effect will be negative: some companies won’t hire, others will raise prices. But in the end, he calculates, the Georgia economy will grow by $534 million – enough to add 4,600 jobs.
Economists say higher wages are like a tax for businesses, and the size of the hit depends on how much of the company’s costs are in low-wage labor. Then, whether the hit is truly painful depends on the company’s profitability and on competition — whether it can raise prices to cover higher costs.
Obama’s proposal would lift the hourly wage in stages, to $9 by 2015. It also would raise the wage automatically to match increases in the cost of living, and Obama also called for a rise in the “sub-minimum” wage for tipped workers.
Prospects for passage are iffy at best, however. Republican leaders in Congress have already signaled their opposition.
Loney, of Stevi B’s, said the timing of Obama’s proposal is bad: growth and hiring are still modest. The new year also finds businesses grappling with new health care law and consumers coping with a higher payroll tax.
For a small start-up especially, a couple dollars an hour in labor can pose a dilemma, said Kelly Mihalis, co-owner of Beer Growler Nation on Lavista Road in Decatur.
She has eight employees, some making less than $9 an hour, she said. “I think folks should earn increases in pay and they shouldn’t be mandated.”
Mihalis said a rising minimum wage would force her to consider cutting hours or raising prices, neither of which she wants to do.
The minimum wage was last raised in three steps starting in 2007, when the economy was still growing solidly, and continuing until 2009 as the downturn hit bottom and job growth restarted.
Adjusted for inflation, the minimum wage now is higher than in the late 1980s and 1990s, but below the levels it held for three decades starting in the mid-1950s. The minimum wage has also not kept pace with productivity gains.
Critics argue the minimum wage is counterproductive – and a distraction from more basic task of fostering growth that would boost employment and wages.
“The minimum wage is just window dressing,” said Kyle Jackson, director of the Georgia office of the National Federation of Independent Business.
Not all business owners oppose the increase. Jordan Chambers, co-owner of the Steady Hand coffee shop in Emory Village, agreed that some small businesses might find a boost troublesome, but he said the bottom of the wage ladder should rise along with economic expansion.
“It would be good (to raise it)” he said. “It hasn’t been raised in 3 years or so.”
He said Steady Hand workers’ pay is above minimum wage because it promotes stability and professionalism.
At the nearby Bad Dog taqueria, owner Tracy Mitchell said she doesn’t think an increase would affect her business, but if she had to she’d raise prices a bit.
“I think customers would understand,” she said. “The change would be nominal.”
Kelly McCutchen, president of the conservative Georgia Public Policy Foundation, said the minimum wage distorts hiring decisions. It shouldn’t be raised, it should be eliminated, he said.
Unhappy workers, he said, can vote with their feet. “It’s a free country. They can quit a job whenever they want and seek better pay.”
He agreed that low-paid workers who already have jobs will benefit, but said others will be shut out of the job market. The latter are hurt more than the former are helped, he added.
Hosiea Adams said he could use some help, wherever it comes from.
The 47-year-old prep cook works a 4 a.m. shift near the airport and makes $8.30 an hour. At shift’s end, he heads home to his $450-a-month Atlanta apartment.
“It’s really hard,” he said. “You pay bills and you don’t have anything left over.”
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