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Pay raise: Minimum wage hike may have mixed impacts
By Michael Boren, Frisco Enterprise
Some workers will have extra money in their pockets when the federal minimum wage jumps to $7.25 on Friday.
But the increase from $6.55 may be a blessing and detriment to a North Texas economy that faces its highest unemployment rate in years.
The wage hike will impact food and personal services most, according to Terry Clower, associate director of the Center for Economic Development and Research at the University of North Texas.
The result may be some employers hiring less, since they will have to pay more to current workers.
The hike could especially affect teenagers and single mothers, Clower said.
“Those two groups in previous research have shown that they are the groups where there is a negative impact,” he said.
That’s because they target seasonal jobs, which some employers could have to cut with higher wages, Clower added.
But will current workers gain any purchasing power from the wage hike? Economic experts agree and disagree on the issue.
“They might see a little gain, but I think that gain will be short-lived,” Clower said.
He warns the gain will be felt until the economy recovers. Then, customers could be spending more as businesses increase product prices.
“Sooner or later, we all have to pay more if you have a minimum wage increase,” Clower said.
But he estimates recovery won’t occur until the fourth quarter of 2009, leaving wary consumers with low demands.
“That means companies don’t have as much ability to go in and raise prices,” Clower said.
However, an employee at a Frisco supermarket was concerned about increasing prices the wage hike could instigate.
“What’s it gonna be, $6 for a gallon of milk?” asked Norma Gold, customer service manager at the Kroger on Rolater Road. “That’s a lot.”
She believed higher prices were coming, though she hadn’t heard any plans for them yet.
Most of Kroger’s employees are paid minimum wage, which Gold argued was too low even with the increase.
“Everything’s so expensive,” Gold said. “How do they expect us to survive?”
She related the lack of higher minimum wages to those around her.
“I have a couple of friends that work three jobs,” Gold said. “They’re working just to get their necessities.”
Nevertheless, she saw a silver lining in how the wage hike would affect the number of employees at Kroger.
“I think we’ll have a little bit more people trying to appear to get a job,” Gold said.
At the Wendy’s across the street, a manager said the hike wouldn’t affect the number of employees he was able to hire or pay.
Yet, the fast food joint was feeling the impacts of the recession.
“Due to the economy, we’re all trying to pay $6.55 just to save some money,” he said.
But the manager believed increased wages would help employees’ families.
“If I was in their shoes, I would be happy,” he said.
At the same time, many North Texans won’t be seeing wage hikes.
One employee at a Wal-Mart in Plano argued the increase wouldn’t affect most employed people.
“Employees that have been with the company for a while, they don’t get the hike,” said Leshia Miller, an employee at the Wal-Mart near Central Expressway. “It’s better for people that are just getting into the job market.”
Miller, a 17-year employee at the store, believed longtime workers should get a raise if newer, lower-paid, employees were receiving one.
But the store typically starts workers at $8.50 to $9 an hour, and there are no plans to increase salaries to match the amounts already above the current minimum wage.
Though Miller saw some issues with the wage hike, she also highlighted the advantages it could bring.
“I think it’ll be good for the economy, because there are so many people that are struggling,” she said. “Hiring is a problem right now. A lot of people can’t get a job.”
June unemployment rates jumped to 8.1 percent in the Dallas-Plano-Irving area, up from 7.1 percent in May, according to the Texas Workforce Commission.
The upcoming minimum wage will be creeping closer to current wages at the McDonald’s on Spring Creek Parkway in east Plano, where some wages hit $7.50.
“More than anything, it will affect labor costs,” the store manager said.
But she admitted the hike could affect menu prices for consumers as well.
Congress approved the wage increase back in 2007 when minimum wage was $5.15, according to CNN.
But as minimum wage has slowly crept up, the economy has tumbled, leaving record-numbers of Americans jobless.
And as some look forward to the thicker paychecks they will bring home, others are left wondering if they will be paying extra costs for the future.
The following are comments from the readers.
In no way do they represent the view of Starlocalnews.com
In no way do they represent the view of Starlocalnews.com
Tina wrote on Jul 21, 2009 6:24 AM:
" Why don't the people who are making all these rules and regulations TRY LIVING on what the fed. minimum wage is and then justify not raising it. It is a crime to want people to try and live on that kind of money. It really is. Most rents start at 700/mo. Even in a family of 2, the food bill is 250/mo.(and that's not eating proper meals). Utilities are another 300/mo.+/-. Figure it it out people, and ya haven't even added in gas in the car to GO TO WORK.... PLEASE.....Someone wake up..... "
Bill wrote on Aug 3, 2009 3:54 PM:
" Winner is the Gov't everything gets compared to the higher GDP. Minimum wage workers net nothing. Small business losses workers over minimum wage lose because prices will be raised. semi skilled workers win because higher minimum wage protects their jobs from being taken over by multiple skilled workers. "
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The lossers will be the people as the increase is always passed down to us and in realality most of the work force will see a decrease in their buying power.
Sorry, just the way it is! "