Business

Ga. unlikely to follow boost in minimum wage, lawmaker says

Tina Dickson has always paid her employees at Ingleside Village Pizza a little more than the federal minimum wage.

“When we first opened up, I think the minimum wage was about $4.25 (an hour) ..., and we started everybody out at $4.75,” Dickson said. “Now the minimum wage is $7.25, and I start everybody out at $9.”

But if the minimum hourly wage jumped up to $10.10 or $15 -- which some Georgia legislators proposed earlier this year -- “that would definitely hurt,” she said.

Dickson said she couldn’t cut some employees to help make up the difference in her bottom line.

“Then you’ve got less people doing the same work,” she said. “I kind of run a bare minimum employee existence as it is. ... I’m not opposed to an increase, but why does it have to be so drastic of an increase? Why not ease into it?”

Georgia and Wyoming are the only two states in the U.S. that set the state minimum wage lower than the federal level -- at $5.15 in both states -- but employees covered under the federal Fair Labor Standards Act are subject to the federal minimum wage of $7.25 an hour.

Few workers, such as some part-time employees, aren’t covered by this law. Georgia lawmakers last changed the minimum wage in 2002, when it was increased to $5.15 from $3.25 per hour.

During the last session of the Georgia Legislature, a proposed Senate bill would have raised the minimum wage from $5.15 to $10.10 an hour. Also, the minimum rate would have increased Jan. 1 each year based on any increase in the cost of living. Another bill in the House would have increased the minimum wage to $15 an hour with future increases for inflation. Neither bill passed.

Other states last year were successful in getting the minimum wage raised, according to the National Council of State Legislatures. The rates in Maryland and Delaware went up to $8.25 an hour, and the rate in the District of Columbia was set at $10.50, making it the first jurisdiction to cross the $10 threshold in the U.S. All new rates became effective this year. The hourly rate in Rhode Island will become $9.60 effective Jan. 1.

Currently, 29 states and the District of Columbia have minimum wages above the federal minimum wage of $7.25 per hour. Five states have not adopted a state minimum wage: Alabama, Louisiana, Mississippi, South Carolina and Tennessee.

A recent wage board recommendation in New York state would establish a $15-an-hour minimum wage for workers at fast-food chains. But setting that rate in New York City, which has relatively high wages and a high cost of living, may be one thing. Requiring wages that high in other small cities may be quite another.

While the campaign to raise the minimum wage has gained strength in some parts of the country, even supporters have wondered how high the rates can rise before it reduces employment and hurts the economy.

“I think $15 an hour would be a problem for businesses in Macon-Bibb (County), and it could potentially be a problem for the city-county and taxpayers,” said Mike Dyer, president/CEO of the Greater Macon Chamber of Commerce. While that minimum wage might work in New York City, Chicago or Los Angeles, “it certainly wouldn’t work in small town America. It would just make our tasks that much more difficult in creating jobs and growing the economy.”

Wages are set by the marketplace, and if the lowest level is raised to $15, it would have a ripple effect, Dyer said.

If restaurant workers end up making the same as police officers or entry-level teachers, “that’s certainly not fair,” and so governments would be forced to pay their employees more, he said.

“The cost will go up for everybody and then of course, who’s going to pay for that? The taxpayers.”

ENTRY LEVEL JOBS HAVE A PURPOSE

“When a price floor (like minimum wage) is above the natural market clearing wage, it is by definition binding and will reduce employment,” Greg George, associate professor of economics and director of the Center for Economic Analysis at Middle Georgia State University, said in an email. “In labor markets such as Macon, a $15 minimum wage rate would be binding for many entry level jobs.”

People in those entry level positions already suffer most from reduced levels of employment opportunities, he said.

“Entry level jobs are not intended to be career jobs,” George said. “They exist to provide basic services and have the added benefit of teaching young and underqualified workers basic job skills and soft skills. Denying workers these basic improvements in human capital prevents them from advancing and climbing the wage scale.”

The question some experts ask is: Where is the point at which job loss risk exceeds the benefit to workers?

State Rep. Allen Peake of Macon said an increase to the minimum wage “would be detrimental to our economy and would only hurt those making minimum wages because their hours would be cut and many positions would be eliminated, especially in the food service business,” he said.

Peake’s view on the minimum wage is twofold. He also is co-owner of C&P Restaurant Co., a franchise group that includes Cheddars, Captain D’s and Fazoli’s.

“Raising the minimum wage will have a significant negative impact on our business,” he said. “We will be forced to raise prices and/or cut hours for employees or cut positions.”

Warner Robins Mayor Randy Toms agreed that raising the minimum wage as much as $15 an hour “would be devastating to a lot of folks.”

It might look good to someone making below that rate now, but “if we increase the minimum wage to whatever, the economy is going to adjust to it,” Toms said.

“At grocery stores, the prices will go up because the minimum wage just went up,” he said. “I really don’t think it’s ever going to have the effect that some people hope it has.”

Toms said if he had to boost an employee’s salary by $6 an hour to get them to the minimum wage, he wouldn’t be able to give the employee currently getting paid more than the minimum a raise of $6 too.

“That would defeat the purpose,” he said. “That wouldn’t make any sense. (The minimum wage) has to be where most people start in their working career.”

Peake said he did not think there would be any serious attempts to raise the minimum wage in Georgia the next session.

“I would not support any effort to raise the minimum wage,” he said. “In fact, I would fight diligently to make sure it does not happen.”

Information from The Associated Press was used in this story. To contact writer Linda S. Morris, call 744-4223, or follow her on Twitter@MidGaBiz.

  Comments