Minimum pay fuels intense debate among opponents and proponents

- May 11, 2013

Marcia Pledger’s article in the Plain Dealer presents arguments for and against raising the minimum wage, keyed on the Fair Minimum Wage Act of 2013, introduced in the U.S. Senate and House of Representatives.

While analysts, economists, politicians and business owners debate whether the federal minimum wage should be raised from $7.25 to $10.10 an hour by 2015, opponents say such a change will kill jobs. Advocates say that the minimum wage, which was created during the Great Depression to provide workers with a “minimum standard of living” and stimulate the economy, has not kept up with inflation. Back then, the minimum wage was 25 cents.

She notes that Sen. Sherrod Brown, who has been pushing hard for passage of the bill, said the federal minimum wage has lost nearly a third of its buying power since its peak in 1968.

“Recent studies show Ohio’s minimum wage of $16,000 per year is at least $2,000 below the poverty level for a family of three,” he said. “While Ohio has a slightly higher minimum rate [$7.85] than other states, it is still too low. The minimum wage in this country should be a livable wage.”

She also talked to our own executive director, Amy Hanauer, who says that “if the minimum wage had kept up with inflation since the high point in 1968, it would be $10.59 an hour today.”

“What that means is even though the economy has grown and worker productivity has grown, the minimum wage has not grown accordingly,” she said. “There’s a lot of evidence that shows that putting more money in the lowest-wage workers’ hands really stimulates the local economy because those workers have to spend everything that they earn.”

Pledger cites the case of a nursing assistant in Cleveland who makes minimum wage and is living paycheck to paycheck.

For Harlston, who is single, making $7.85 an hour goes quickly with a cellphone bill, bus fare, about $150 a month on groceries and another $50 to $100 on toiletries. The rent on her tiny one-bedroom apartment is federally subsidized. She pays just $25 a month

She also checks in with an Akron restaurant owner who pays more than the minimum to his workers because “if you take care of people, it’s going to come back to you.”

B.J. Mikoda, owner of Valley Cafe in Akron said he pays a minimum of $5.50 per hour to tipped servers to compensate for their hard work and sometimes less than adequate tips from customers.

The federal minimum for tipped employees stands at just $2.13 an hour, but the proposed legislation seeks a gradual increase to 70 percent of the regular minimum wage. The Ohio minimum wage for tipped employees is $3.93 per hour.

Mikoda said some tipped workers who work at places that serve liquor or have heavy traffic do fine, but instead of focusing on a minimum wage, business owners should consider what they’re trying to build.

“I just believe that if you take care of people, they take care of you and they work their butts off for me and they deserve as much as I can possibly give them,” he said.

Pledger quotes an economist and spokespersons for U.S. Sen. Rob Portman and the restaurant association, who say raising the minimum will put an unfair burden on small-business owners, causing them to cuts worker hours and even jobs. She goes on to quote union leader Bob Grauvogl, of the United Food and Commercial Workers Union Local 880.

“The claim that small business will lay off workers or reduce their hours if the minimum wage increases is pure balderdash,” he said. Grauvogl said small business doesn’t create jobs — demand creates jobs. And extra money in the pockets of the workers at the end of the month is what creates demand.

“Increasing the minimum wage is the surest way to create the hours and jobs that will strengthen the middle class and help our economy recover,” he said.

Bill Boonstra of Bluestone Perennials in Madison, is one small-business owner who does not have a strong opinion on the possibility of a minimum wage increase, writes Pledger.

While most positions at his mail-order business pay a lot more than minimum wage, even entry-level positions start at $9 an hour or $8.50 an hour for students. Those types of jobs include order-filling, production, nursery positions, grass-mowing and weed-pulling.

“We haven’t paid minimum wage for probably 10 years because we don’t think it’s a fair wage for the effort we’re asking.” 

Minimum pay fuels intense debate among opponents and proponents

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