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Minimum wage: Call for an increase to $9 per hour has both supporters and opponents

 

Victoria Richmond folds clothes Saturday at Watkins Washette on Highway 45. Richmond, who was hired at the laundromat three weeks ago, says she is grateful for the $8 per-hour job but she hopes the minimum wage increase passes Congress.

Victoria Richmond folds clothes Saturday at Watkins Washette on Highway 45. Richmond, who was hired at the laundromat three weeks ago, says she is grateful for the $8 per-hour job but she hopes the minimum wage increase passes Congress. Photo by: Carmen K. Sisson/Dispatch Staff

 

Carmen K. Sisson

 

It's a busy day at Watkins Washette on Highway 45. Almost every washer is whirring and the warmth from the dryers lends a welcome, almost homey atmosphere to the crowded laundromat.  

 

Victoria Richmond, 41, began working here three weeks ago after being unemployed for seven months. She's grateful for both the job and the $8 per hour it pays, but like 21 million other low-wage workers around the nation -- 58,000 in Mississippi -- she's keeping a watchful eye on President Barack Obama's effort to raise minimum wage from $7.25 per hour to $9 per hour.  

 

It would help her family, Richmond says. Since her husband passed away eight years ago, her children -- now grown but still living at home -- have had to pick up the slack. 

 

Her daughter, 19-year-old Taylor Rushing, works across the street as a cashier at Tina Watkins 45 gas station. She, too, stands to see a bigger paycheck if the proposal passes Congress, and it will come in handy. Richmond's son lost his construction job six months ago, and his girlfriend, who also lives in the house, just lost her job, too.  

 

Richmond pauses a minute when asked how she would spend the extra money if the wage increase passes.  

 

Her 2003 Pontiac Grand Prix hasn't had an oil change in longer than she can remember, and the brakes are bad. Both she and her son need to see a dentist, but for now, they swallow over-the-counter painkillers by the handful.  

 

"I can't afford it -- I can't even afford car insurance," she says of the car repairs and dental work. "That's not normally something I have extra for at the end of the month." 

 

Richmond's situation is not unique. Though she and her daughter together make enough to keep the family afloat, if either lost her job or had her hours cut, they would join the 10.5 million other families across the nation who make up the "working poor" -- employed 27 or more hours per week but still falling below poverty level.  

 

But is Obama's proposal the answer? It depends on who you talk to, both politically and socioeconomically.  

 

 

 

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Proponents of raising the minimum wage say it is a move that should have been made long ago. The last increase, in 2009, was the last of a three-step incremental bump from $5.15 per hour to the current $7.25 per hour. Before that, the minimum wage had languished for a decade at $5.15 per hour. If adjusted for inflation, minimum wage should be $10.56 per hour today, based upon the U.S. Bureau of Labor Statistics' Consumer Price Index.  

 

With more money in their wallets, consumer confidence would rise and that money would be pumped back into the still-recovering economy, advocates say. With consumers spending more, demand would increase and so would jobs.  

 

That was the idea in 1933 when President Franklin D. Roosevelt pushed the nation's first federal minimum wage -- 25 cents per hour -- through Congress as part of his National Industrial Recovery Act. Though it was struck down three years later as unconstitutional, it was reestablished in 1938.  

 

A report from the Economic Policy Institute, a Washington, D.C.-based, nonprofit think tank, supports the theory, saying that raising the minimum wage would have a "demonstrably positive" effect on the economy, primarily because workers like Richardson would immediately spend their new earnings on needs and services they could not previously afford.  

 

 

 

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But opponents argue that the move could have a disastrous effect, harming the still-struggling economy and possibly throwing the country back into recession by causing companies to raise prices and possibly even cut jobs.  

 

It is difficult to find precise empirical data on how an increase in the minimum wage would affect the national economy, mainly because the minimum wage has never been high enough to affect more than a small minority of workers, and these are the very workers whose employment patterns are most volatile.  

 

Most arguments, then, are based on general data supported primarily by anecdotal evidence. 

 

Kathy Griffith, operations manager at American Power Source in Columbus, which makes military uniforms, says she has already reduced her workforce from 150 people to a lean 60, and if the minimum wage is increased, she will be forced to raise the price of her products, resulting in fewer orders and, potentially, fewer employees needed on the floor.  

 

"I think it's a moot point -- it cancels out," Griffith said via telephone Thursday. "I think it's for show and not really going to meet the needs the president is wanting to meet. I worry about finding any work at this point. We had good people laid off." 

 

 

 

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It's too soon to say what impact the move might have on Mississippi's unemployment rate, says Mary Willoughby with the Mississippi Department of Employment Security. The state hovered at 9.2 percent unemployment in January -- 1.3 points above the national average -- but employers might think twice about taking on new workers if other costs are rising, Willoughby says.  

 

It's hard, from a purely economic standpoint, to find a positive side to raising the minimum wage, says Mike Highfield, head of the finance and economics department at Mississippi State University.  

 

Typically, he says, wage increases result in unemployment increases. And if employers do keep workers, they may end up reducing their hours or benefits to offset costs. The idea that the money will be quickly shuffled back into the economy doesn't work because it requires "a very strong assumption" that every worker will want -- and be allowed -- to work as much as possible at the higher wage.  

 

Highfield doesn't see that happening, and even if it did work that way, he doesn't believe now is the right time to implement such a drastic change.  

 

"I can't see that the economy is strong enough right now to support something like a minimum wage increase," Highfield says. "You typically don't see these types of things in very bad economies." 

 

 

 

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In Mississippi, which remains economically unsound, such a move could slow or even stall economic recovery, says Lucy Betcher, director of the Center for Creative Entrepreneurship at Mississippi University for Women.  

 

The current economy is so different from the ones economists have seen historically that it's hard to predict, she says. People might spend more if they are making more, but if the prices of products and services rise at the same time, their buying power will remain the same.  

 

"We are in that seesaw modality," she says. "I think the tipping point is very tenuous. It could easily go either way, and that's been the case with so many things. The economy starts to look like it's catching its breath and then some new expense or threat of expense will rear its head and confidence plateaus and people back off on spending. It could easily stall the progress we've made." 

 

It's a great idea and could benefit many workers, she believes, but from a small business standpoint, with business owners stretched to the limit and trying to eke profits out of a bleak market, a wage increase is not likely to be met with enthusiasm.  

 

 

 

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But the fact remains that it's almost impossible for families to survive on minimum wage, experts say, and the hardest hit are women and minorities. Women make up two-thirds of the workforce earning below minimum wage, and blacks and Hispanics make up 39 percent, according to the U.S. Bureau of Labor Statistics.  

 

The National Low Income Housing Coalition in Washington, D.C. estimates that not a single state in the country pays enough for a minimum wage employee to afford a two-bedroom apartment.  

 

A single mother of two, working 40 hours per week at minimum wage, would bring home $15,080 a year -- well below the poverty threshold. In Lowndes County, she would have to earn $10.46 an hour -- or work 1.4 full-time jobs to afford the average two-bedroom apartment. If she lived in Oktibbeha County, she would have to earn $11.31 per hour.  

 

A minimum wage worker in Mississippi would have to work 66 hours per week to afford a two-bedroom apartment at fair market value.  

 

"I can't see how families survive," says Willie Stennis as he watches his clothes tumble in the dryer at Watkins Washette. "Something's gotta give. The government's got to try to bring things up to standard so people can enjoy some of the things other people enjoy in life." 

 

He is fortunate. At 57, he has worked most of his adult life -- 36 years -- at Weyerhauser, where he is now a technician. He earns well above minimum wage, but he would still like to see Obama's proposal come to fruition, because he believes it will help those who need it most -- the poor who are trying to make better lives for themselves.  

 

But only time will tell if that ends up being the case. Some experts suggest the trade-off may not be worth it -- a possibility they urge lawmakers to consider.  

 

"In the short run, minimum wage increases both help some families out of poverty and make it more likely that previously non-poor families may fall into poverty," say researchers with the National Bureau of Economic Research.  

 

But for people like Richardson and her family, the opinions of economists and political pundits have little correlation with the choices they are forced to make each day between food and medicine, utilities and rent.  

 

"It would help me," Richardson says, folding a T-shirt and adding it to a stack of fresh laundry. "I hope it passes."

 

Carmen K. Sisson is the former news editor at The Dispatch.

 

 

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