Minimum wage going up, little help as costs soar
Associated Press
WASHINGTON — About 2 million Americans get a raise today as the federal minimum wage rises 70 cents. The bad news: Higher gas and food prices are swallowing it up, and some small businesses will pass the cost of the wage hike to consumers.
The increase, from $5.85 to $6.55 per hour, is the second of three annual increases required by a 2007 law. Next year’s boost will bring the federal minimum to $7.25 an hour.
Workers like Walter Jasper, who earns minimum wage at a car wash in Nashville, Tenn., are happy to take the raise, but will still struggle with the higher gas and food prices hammering Americans.
“It will help out a little,” said Jasper, who with his fiancee support a family of seven, and who earns the minimum plus commissions when customers order premium car-wash services.
The bus fare he pays each day to get to work already went up to $4.80 this spring from $4. “I’d like to be on a job where I can at least get a car,” he said.
Last week, the Labor Department reported the fastest inflation since 1991 — 5 percent for June compared with a year earlier. Energy costs soared nearly 25 percent. The price of food rose more than 5 percent.
So the minimum wage hike is “a drop in the bucket compared to the increases in costs, declining labor market, and declining household wealth that consumers have experienced in the past year,” Lehman Brothers economist Zach Pandl said.
The new minimum is less than the inflation-adjusted 1997 level of $7.02, and far below the inflation-adjusted level of $10.06 from 40 years ago, according to a Labor Department inflation calculator.
Twenty-three states and the District of Columbia have laws making the minimum wage higher than the new federal requirement, a group covering 60 percent of U.S. workers, according to the Economic Policy Institute, a think tank.
“You get desperate, because you can’t really pay for everything,” said Gladys Lopez, 51, a garment worker from Adjuntas, Puerto Rico, who makes military uniforms and has earned the federal minimum for 18 years.
She says she would need to make at least $50 more a week to pay all her bills and take care of her 84-year-old mother, whom she supports.
When the minimum rises again next year, catching up with more states, more than 5 million workers will get a raise, said Lisa Lynch, dean of the Heller School for Social Policy and Management at Brandeis University.
Some small businesses are already making plans to raise prices to offset the higher wages they have to pay their workers.
David Heath, owner of Tiki Tan in College Station, Texas, said the increase will force him to raise prices for his monthly tanning services by about 12 percent. Tiki Tan had been paying its employees $6 per hour.
“There just isn’t any room for profit, and so this is why prices will have to go up,” he said, citing the wage increase and higher fuel costs. “I have to recoup those costs.”
The increase in the minimum wage could push food prices even higher by rising the pay for agricultural workers, said Brian Bethune, chief U.S. economist at consulting firm Global Insight.
But he said he did not expect the change to have a major impact on the economy because recent increases in productivity, which enables companies to produce more with fewer workers, are keeping labor costs in check.
That makes it unlikely the minimum wage increase will trigger a “wage-price spiral,” in which workers facing higher costs demand more pay, which in turn causes companies to raise prices higher, sending inflation coursing through the economy.
And most businesses, even restaurants and other service sector companies, already pay above the minimum wage anyway. Dan Whitaker, general manager at Anis Bistro in Atlanta, a casual French restaurant, said employees earn at least $8 an hour.
“You can’t get a dishwasher for minimum wage,” he said.
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Filed by Associated Press July 24th, 2008 in Top Stories. Popularity: 4% |
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Comments
Comment from
gala7516
July 24, 2008, 10:56 am
Just get rid of the minimum wage all together. If people are too dumb to work at a job that doesn’t provide them enough money for a particular lifestyle, that is their own bad luck.
Comment from
miss_k
July 24, 2008, 2:25 pm
i wouldn’t call them dumb…at least they are working!! at least i know they have enough pride to go out and take whatever job is availabe (considering jobs are so scarce these days) instead of letting my hard earned tax dollars pay for them.
also, taking care of an 84 year old mother is no comparison to someone who chooses to live a lifestyle above and beyond their means.
having said that…it’s not the people in this article who appear to be dumb…
Comment from
Lindalee56
July 25, 2008, 9:34 am
gala7516 you have no soul. Almost everything you type in these comments is negative and trying to degrade others. What a waste of your intelligence.
Comment from
gala7516
July 25, 2008, 10:07 am
Why does one have SEVEN KIDS if they are only qualified for minimum wage jobs. That is pure stupidity. Read the article!
That lady taking care of her 84 year old mom was working at her crappy minimum wage job for 18 years! Most people stop working at those jobs when they turn 18.
Get a clue.
You want to REALLY help people, stop taxing tips, eliminate the minimum wage, and fix the dollar (which continues to tank).
Comment from
motherof2
July 25, 2008, 10:27 am
How ignorant of a person can you be? Most jobs in this world are those that only pay minimum wage, so it is very hard to get a job that doesn’t. I am trying to support 2 children on it after I went to school for 5 years, so I didnt have to. You need to really look at our economy and get a clue. How old are you 18? I think that you should probably get your facts straight before you come on here putting people down for doing the best that this world will let them do. Not all of us are Bill Gates or Donald Trump. HOW DARE YOU criticize those that are trying in this world without taking the easy way out and sitting on there behinds and using the system.
Comment from
gala7516
July 25, 2008, 10:36 am
This is a joke, right?
HOW DARE YOU criticize those that are trying in this world without taking the easy way out and sitting on there behinds and using the system.
Comment from
aterryw
July 25, 2008, 11:37 am
gala7516 what burgerking do you work at? Most folks who complain as much as you do on a subject must be in the subject..
by the way that family of 7 is actually 2 families…. he’s engaged….
Comment from
gala7516
July 25, 2008, 11:52 am
I am in the situation. I am running a company and am forced with high labor costs. My decisions are: (1) shut down, (2) shut down locally and move where labor is cheaper, or (3) pass the costs on to my customers.
Now, what am I supposed to do?
Comment from
gala7516
July 25, 2008, 12:09 pm
I know this won’t be popular, but it has to be said:
“Why do politicians love to propose increases in the minimum wage?
1. It costs them nothing other than the ink and paper the bill is printed on.
2. The vast majority of the law’s supporters simply do not understand the technical economic reasons why the law fails to help the working poor.
3. Many people do not understand what the law actually means.
4. Powerful special interests favor the minimum wage for reasons unrelated to the welfare of low-wage workers.
5. The minimum wage promises to give us something for nothing.”
This is an excerpt from an article by Mark Jeftovic, who runs EasyDNS.com, the great DNS hosting service we use for all our domains. Very smart man.
He wrote a very insightful analysis of the big Social Program addiction that Canadians are so warm to, and that the U.S. is now getting all lathered up about. A very great read:
Comment from
JAWBONE
July 25, 2008, 12:10 pm
gala7516…..What is your starting pay for entry level employees with no skills? I bet it is barely above minimum wage so get off your high horse. I work in a manufacturing company (in a management position) and I know the owners here pay only slightly above min. to start in the plant. I don’t know how these workers get by on even $8-10 per hour.
Comment from
yourmomsbox
July 25, 2008, 12:59 pm
Is it that hard to see that inflation is a byproduct of this law?
Comment from
Jack Miller
July 25, 2008, 2:04 pm
I saw a disheartening story on the news last night. The big box retailers have tried holding back raising their prices too much. Well, the gloves are off and they have to raise them even higher. Costco was the store featured, but they said big box retailers. I have noticed Wal-Mart prices have been going up quite a bit too. The increase in minimum wage will not help because the extra 70 cents will be swallowed up and then some.
Jesus, there are so many small and large businesses barely holding on and this increase could be a death blow to them. Sometimes I get the impression this whole circus is organized to do exactly what it’s doing.
Comment from
Boomer
July 25, 2008, 3:43 pm
gala7516
How much money do you make from your company with your employee’s are high paid?
$100,000.00 + ????
Sounds fair to me.
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