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.

Keisha Walker, for one, is happy that Congress is at least debating whether to raise the minimum wage. For her, boosting it to $7.25 would mean earning an extra $1 an hour – enough to pay for eight months of groceries or perhaps a few nights out.

An office assistant for a low-income apartment complex in Atlanta, earning $6.25 an hour, Ms. Walker is one of 139,000 Georgians who would benefit directly from a minimum-wage hike. A technical school dropout and mom in her late 20s, she scratches together a living, relying on her fiancé to pay major bills.

"They need to raise it if only to help people pay for [rising] rent," she says, returning by bus from taking her two sons and a nephew to football practice. "It's getting so you can't survive in this country."

Such a raise looks unlikely, with the Senate Wednesday voting down a wage-hike amendment and a House committee poised to do the same. Still, the debate focuses attention on people at the very lowest wage rungs. When adjusted for rising living costs, those earning minimum wage make less per hour today than they have in the past 51 years. A glimpse at this low-wage workforce shows a broad blend of faces and backgrounds from teenage lifeguards to single moms, from immigrants to grandmothers, that, together, wage-hike proponents say, form an alliance of the chronically underpaid.

But whether the fortunes of these 8 million Americans, earning less than $7.25 an hour, would rise or falter under the first government-ordered wage hike in 10 years is the broader debate spreading from restaurant kitchens on Capitol Hill to the grocery store aisles of Atlanta.

"The typical minimum-wage worker is not a teenager earning side money," says Isaac Shapiro, an associate director at the Center on Budget and Policy Priorities, a liberal-leaning think tank in Washington. "Most minimum-wage workers, those most affected by the wage increase and those just above the minimum wage, their earnings can really be vital to their household economics."

Big contributors to household income

Some 48 percent, or 3.5 million, are between 25 and 64 years old who, on average, contribute more than half of the income in their households, experts say. Raising the minimum wage is a $18.4 billion proposition that is supported by 83 percent of Americans, according to the Pew Center for the People and the Press.

"This is an issue that has to do with the fact that economic growth is not being shared equitably among all Americans," says a spokesman for Rep. George Miller (D) of California, who had introduced a minimum-wage bill last year.

Lanky, with a wide smile and a tight-knit straw hat on his head, Thomas, a Liberian immigrant who prefers not to give his last name, worked for five years as a gas-station attendant, never making more than $5.15 an hour. It was so little money he had to quit. He went freelance, selling mattresses on the street from the back of his beat-up Chevrolet truck. He rents a room with a friend in a flop house. He sends his extra money back home to Liberia – or gives it to needy people in his neighborhood.

"There's no way you can depend on one job anymore," says Thomas. "You have to get out there and hustle, have two or three different things going, to make it work. Everyone is suffering. They all tell you the same story."

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.

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!"

Are minimums counterproductive?

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.

You've read  of  free articles. Subscribe to continue.
QR Code to If minimum wage is raised, who benefits?
Read this article in
QR Code to Subscription page
Start your subscription today