Wage increase brings little change locally

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By Roger Meissen
Fulton Sun, Jul 28 2009
Employees across the country started receiving more money on Friday, as the new federal minimum wage raised worker pay.

As wages increased to $7.25 nationally, Missourians will get an increase of 20 cents as it takes precedent over the state minimum wage of $7.05. Tipped employee's pay will also increase proportionately to $3.625.

As Missouri's jobless rate rose to a 26-year high of 9.3 percent last month any change that further squeezes employers here and in the rest of the country brings concern. While Missouri employees will not see a huge increase -- only amounting to $8 more a week for someone working 40 hours -- the 30 states with the lowest minimum wage will see a bump of 70 cents for their lowest paid workers.

Backers of the increase say it's long overdue for the more than 4.5 million working poor in the country, who struggle to make ends meet because of their low minimum wage. George Miller, D-Calif, authored the 2007 minimum wage bill, which increased pay for the first time in a decade.

"A higher minimum wage helps working families' budgets and results in increased spending on local business, which is good for everyone," Miller said in an e-mail.

One local business agrees with that reasoning. Mom's Corner Cafe co-owner Angie Pyatt said that she already pays her workers more than the minimum because no one can make ends meet at its level.

"All of our employees are already paid more than minimum wage," she said. "I think it's a good idea for it to go up; I don't know how people can make it on minimum wage, especially if you have children or are married."

Many businesses are absorbing the increased wage costs or adjusting prices of services accordingly to cover the change.

Manager of the Fulton Cinema 8 said that it will be increasing the cost of some concessions to offset its increase.

"We've made a very, very small adjustment to some of our concession items to cover that wage change," General Manager Tyler Rice said. "We've got a fairly small staff of around 20 people, so that probably isn't going to be that noticeable to customers."

The change will most certainly affect fast food establishments, who hire a high number of employees and pay them minimum wage. No comment was given by managers or owners of local fast food businesses, including McDonald's, Taco Bell and Wendy's.

Higher education is another area where some employees, notably student workers, will receive some increases.

Westminster College Vice President of Business and CFO Terry Bowmaster said that the increase won't have much of an impact for his college.

"Student employment, some part-time employees and others were impacted by this increase," Bowmaster said. "It's been integrated into our budget and we haven't cut back on student employment or other positions.

"That's partly due to the increase in enrollment we are seeing for fall enrollment, and if we were looking at a flat or decreased enrollment we may have had to take a different approach," he continued. "Our approach, rather, has been to look at where we need to adjust to accommodate for that large increase in students."

Yet, not all see the gloomy predictions of some to be reality. More upbeat predictions suggest the wage increase could actually play a role in turning around the nation's finances. Labor Secretary Hilda Solis said Thursday that the wage increase will generate an extra $5.5 billion in consumer spending over the next year.

Holly Sklar, a senior policy adviser for Let Justice Roll, a national campaign aimed at increasing the minimum wage to $10 by 2010, also thinks economists don't give enough credit to the impact of increased consumer buying power.

"You can't have an economy that's based heavily on consumer purchasing power, and at the same time, not pay the consumer enough to live on," Sklar said.

A further national wage increase could eventually become a reality in the near future if President Barack Obama keeps a campaign promise to raise the minimum wage to $9.50 an hour by 2011.

Regardless, this increase won't be the last Missouri businesses and employees see. After the Missouri General Assembly and Gov. Matt Blunt voted for a 2006 law, wages will now increase if the Consumer Price Index rises.

While the CPI is likely not going to cause an increase this year, the Missouri Department of Labor and Industrial Relations annually looks at it in January to adjust state minimum wages. For entities like colleges and businesses that start their fiscal year in July, that means some guesswork as to what might happen by January.

"As with any other variable we don't know at the time of budgeting, we try to make our best estimates and make adjustments from that," Bowmaster said. "If there's a year in the future where there's a significant difference from our estimate to the actual cost of an increase, we'll just have at the actual results and react accordingly throughout the rest of the year."