If minimum wage is raised, who benefits?
Congress has started a debate on raising the $5.15-an-hour minimum wage. The Senate rejected a big hike Wednesday.
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According to the Center for Economic and Policy Research, nearly a third of the workers who start at minimum wage are still working at that rate three years later. A quarter, also like Thomas, stop working – or at least leave official payrolls. Thirty-nine percent move up to better wages.Skip to next paragraph
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In Atlanta, working full time at minimum wage amounts to a third of the $32,000 a year it takes for a no-frills life, says the Center for Economic and Policy Research. Only six percent of Georgia residents hold low-wage jobs, while states like Montana, West Virginia, and Alabama have the highest rates, around 10 percent. Twenty-one states have set higher-than-national minimum wage rates.
One reason even some Republicans are mulling the wage hike is that the number of single mothers making minimum wage has nearly doubled in the last 10 years. Of Americans making less than $7.25 an hour, half are over 24 years old, and about half are primary household earners. Sixty-two percent are white, 16 percent are black, and 17 percent are Hispanic. Nearly twice as many are women than men.
"The relative value of the minimum wage has fallen by nearly 20 percent," says Heather Boushey, an economist with the Center for Economic and Policy Resarch. "These families are already living at the bottom, and you're talking about families who didn't have a lot of frills to begin with."
For Ms. Walker, the Atlanta office assistant, rising child-care costs mean that her weekly paycheck is not enough to stay employed, at least when school is out, so she took the summer off to care for her two boys, Derick and Rico. That means she has learned how to cook and takes the bus. Her boys' football program is subsidized. Movie nights are out. Cookouts in the park are in.
"I'm lucky to have someone who can help out," she says. "A lot of people don't."
One of them is Mary Davidson, a single, 50-something dry-cleaning clerk in Charlotte, N.C.. Rising gas prices forced her to look for work closer to home. She found a job at $6.50 an hour, and she took it.
Going out to eat is out of the question. But she finds solace in her church choir, but feels guilty even there. Her income, especially working only 20 hours a week, doesn't allow her the 10 percent tithe that is expected.
"I'm making $6.50 – that's no money!" she says. "People should understand, especially people at the White House behind a desk – put yourself in my shoes. Pay my money for your bills. See if you can make it!"
But some economists say the minimum wage does more damage than good, and see its diminishing value as a sign of its waning importance. After all, they say, the number of people who would be affected by the wage increase has decreased from 10 million in 1996 to some 8 million today, while average wages have risen from $12 to $16 an hour since the last hike.
In fact, they say, upping wages will only create incentives for businesses to hire fewer low-skilled workers – which is what happened when at least 146,000 restaurant workers lost their jobs after the last minimum-wage hike, according to the National Restaurant Association.