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Minimum wage increases Tuesday

June 21, 2007 - Daily Journal

Minimum wage increases

Effective date Hourly rate
- July 24 $5.85
- July 2008 $6.55
- July 2009 $7.25

How yearly income is affected

Assuming a standard 40-hour workweek

Rate Annual
- $5.15 $10,712
- $5.85 $12,168
- $6.55 $13,624
- $7.25 $15,080

Did you know?

Twenty-eight states and the District of Columbia have minimum wages that surpass the federal standard. Missisippi is not one of them.

Minimum wage increases Tuesday
- The rate will rise to $7.25 an hour in two years.

Charles Campbell isn't like most economists - he supports the increase in the minimum wage.

On Tuesday, the first of three 70-cent increases takes effect, with the federally mandated pay rate rising from $5.15 to $5.85. The impact on area businesses will be mixed, according to their owners.

Passed by Congress in May, the rate goes up a total of $2.10 over the next three years. It's the first increase since 1997.

Opponents claim small businesses will be hurt by the move and jobs will be ellminated, particularly among younger workers. Supporters like Campbell, a Mississippi State University economics professor, say mandatory minimum wage increases benefit the economy.

"It increases the living wage of people," Campbell said. "Let's say you have a restaurant and your employees include a 35-year-old mother of four and a 17-year-old high school kid. If you have to drop an employee because of the increase, you'll probably drop the kid.

"That mother may have to work some overtime to make up for that kid not being there, but she's also increasing the money she's bringing home."

Most economists and opponents of a minimum wage increase disagree with Campbell's assertion that the "working poor" benefit. Campbell acknowledges their differences.

"Yes, people will argue that having that kid out of work is bad, that the kid is being taken out of the labor force," he said. "But the mother of those kids is making more, and that's what I'd rather see.

"It boils down to what you believe is best."

Area businesses react
Columbus-based Eat With Us Group, which includes Harvey's, Park Heights and Sweet Peppers Deli, won't be affected by the increase - yet.

"We have very few employees that will have been working under the new minimum wage," said Bernard Bean, whose family helped create the company. "Next year, there might be some effect on our pricing, but we really can't say yet."

In two years, when the rate goes to $7.25 per hour, Bean said the company definitely will to look at its prices.

"We're already hit by rising food costs and fuel costs," Bean said. "I think you'll see more impact from that in the restaurant industry over the next couple of years."

Some area businesses where young workers are often on the payroll declined to comment about the impact of the minimum wage hike. A spokeswoman for Memphis-based Malco Theaters said "we have no comment at this time" and Plano, Texas-based Cinemark Theaters did not respond to calls.

Wal-Mart, the world's biggest retailer, publicly supported the rate increase but declined to reveal the financial impact on its operations.

"We applaud the bipartisan congressional support that led to passage of this much-needed increase in the federal minimum wage, which will help many working families," said company spokesman Kory Lundberg. "We believe the overall effect on Wal-Mart will be positive."

Estimates are that some 2 million workers earn the minimum wage or less, and some economists say another 15 million other workers will benefit from an increase in the standard.

Opponents like the National Federation of Independent Business says small business are hurt the most with the increases because they have the most minimum-wage jobs.

"Government manipulation of the starting wage has failed as a tool of social and/or economic justice. It has not been proven to reduce poverty or narrow the income gap," it has argued.

Contact Daily Journal business editor Dennis Seid at 678-1578 or dennis.seid@djournal.com.

By Dennis Seid

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