Minimum wage issue is on the radar in 2014 election

McClatchy Washington BureauMarch 20, 2014 

  • Some facts about the minimum wage

    • A person working 40 hours a week, 52 weeks a year, at $7.25 an hour earns $15,080 a year. Adjusted for inflation, the wage was higher in the 1960s and ’70s.

    • The federal minimum wage last went up in 2009, the last of a three-stage increase that Congress agreed to in 2007.

    • In North Carolina, 137,000 people, or 6 percent of the hourly paid workforce, earned $7.25 or less, according to the latest report, for 2012, from the Bureau of Labor Statistics.

    • The president’s Council of Economic Advisers estimated that 28 million workers would earn more pay if the minimum wage went up to $10.10, including more than 1 million in North Carolina. The CEA included workers now making between $7.25 and just over $10.10 an hour.

— Ashley Echevarria, a 24-year-old mother of two, has been working as a cashier at a McDonald’s restaurant in Durham for two years at the federal minimum wage of $7.25 an hour – not enough, she says, to support her family.

“I can’t pay on time, or buy clothes for my kids,” she said earlier this week after taking part in a protest for higher pay. “I’m struggling to do that right now.”

President Barack Obama and congressional Democrats support legislation that would raise the federal minimum wage to $10.10 in two years. After that, wages would be indexed to inflation.

The Senate is expected to vote on the bill in the next few weeks. It’s not expected to get far in the House of Representatives, however, because the Republican majority there opposes the wage hike. Still, Democrats see a minimum wage increase, which has strong public support in polls, as a key issue in their 2014 campaigns.

It’s likely to play a role in the North Carolina Senate contest, in which Democratic incumbent Kay Hagan will face one of several contenders seeking the Republican Party nomination. The first-term senator supports an increase; her potential GOP opponents do not.

Echevarria said she works about 25 hours a week, though she’d like to get more hours. She earns about $600 a month. She also receives a government assistance check, which varies with her earnings and recently was about $450, and Supplemental Nutrition Assistance Program benefits, which she said don’t cover her food bill through the end of the month.

Her children’s father also works at McDonald’s for slightly above the minimum wage. But the pay still doesn’t stretch far enough, she said.

Obama raised the minimum wage for federal contractors to $10.10 per hour in February. He called on Congress to raise it for everyone else in his State of the Union speech this year and has repeated the request several times since then.

Without a further increase, the minimum wage will lose 1.7 percent of its value because of inflation in 2014, or $250 for a full-time worker, according to a White House fact sheet released Wednesday.

The nonpartisan Congressional Budget Office recently reported that an increase to $10.10 would lift 900,000 people above the poverty threshold. CBO also estimated employers would cut about 500,000 jobs nationwide.

A chief criticism of an increase has been that it doesn’t help families. But federal data also show that teenagers aren’t the majority of minimum-wage earners. The CBO said that of the 5.5 million Americans who earn the minimum wage plus or minus 25 cents an hour, three-quarters are 20 or older, and 40 percent worked full time.

Business community divided

David Ribar, an economics professor at UNC Greensboro, said one of the benefits of using the minimum wage as an anti-poverty program is that “there’s no stigma.”

“There are a lot of ways to fight poverty, but a lot of them involve government programs,” he said. “But with the minimum wage, there’s nothing to sign up for.”

Small-business owners have been divided over the economic effects of a minimum wage increase.

Lindsay Mumma, a Raleigh chiropractor, strongly opposes the idea of an increase.

Mumma said she paid a high school student who was her receptionist $8 an hour and gave her a 15-cent raise after six months “because she was making my job easier and doing good work for me.”

But Mumma said she didn’t replace the young woman when she went to college and won’t now that there’s discussion of raising the minimum wage.

“A receptionist makes my life easier but does not make me money,” she said. “By paying them, I am essentially losing money. I can’t afford to lose $10/hour (or more).”

Harvey Schmitt, president and CEO of the Greater Raleigh Chamber of Commerce, said the business community in general sees a minimum wage increase as a “job killer.”

North Carolina’s Republican-led General Assembly members would “see this as a drawback to economic expansion as opposed to a support,” he added.

Others argue there would be an economic benefit.

Small Business Majority, a nonprofit policy research group, found in a poll of 500 business owners in February that 57 percent favored increasing the minimum wage to $10.10. The poll had a margin of error of plus or minus 4 percentage points.

The survey also found 82 percent of respondents paid their employees more than the federal minimum.

Cindy Jones of Savory Spice Shop in Raleigh falls in that category. “I can’t imagine getting the loyalty or customer service we expect to provide if we were paying $7.25 an hour,” Jones said.

Issue in Senate race

John McNeill, Democratic Party chairman of Robeson County, one of the poorest in the state, said that when workers have more money to spend, it’s good for the local economy. He also is a business owner, with two jewelry stores in the Lumberton area.

McNeill said he thinks the minimum wage will become a hot issue in the Senate race and help Hagan and other Democratic candidates.

“We’re going to turn out a lot of additional votes,” he said. “If Democrats could turn out, for instance, the 35 and younger as well as the unaffiliated voters over this issue, it could make the difference in the race.”

Hagan, too, hopes the minimum wage debate will draw voters to her in a contest that could be pivotal to her party maintaining control of the Senate.

“The families I talk to are working more jobs and still falling behind,” she said. “Raising the minimum wage would benefit over 1 million North Carolinians.”

But state House Speaker Thom Tillis, one of several Republicans hoping to unseat the senator, has said that raising the minimum wage is a “dangerous idea.” He recently told reporters that it “drives costs and it could harm jobs.”

Asked if the minimum wage should be done away with, Tillis replied: “Yeah, I think you should consider anything that frees up the market to create more jobs, but the reality is you can’t un-ring that bell, and you have to look at whether it creates destabilization in a market that’s already destabilized.”

His spokesman, Jordan Shaw, said Tillis wants the wage to stay at $7.25.

Another GOP Senate hopeful, Charlotte pastor Mark Harris, opposes an increase because it would raise employers’ costs, said his spokesman, Mike Rusher.

The Hill, a Washington newspaper, reported that Greg Brannon of Cary, a Republican contender for Hagan’s seat touting his affiliation with the tea party, is also against the idea. His spokesman, Reilly O’Neal, did not return requests for comment.

‘No good time’ for increase

The Small Business and Entrepreneurship Council, an advocacy group based in the suburbs of Washington, D.C., opposes an increase in the minimum wage, arguing that it would force employers to cut jobs or, if they can’t reduce the workforce, lose money.

Karen Kerrigan, the council’s president and CEO, said a Senate vote would be purely election-year messaging, because there’s no chance of the law passing Congress.

“While there is no good time to raise the minimum wage, it is particularly misguided at this point in time given the long struggles this economy has had in terms of poor job creation,” said Raymond J. Keating, the Small Business and Entrepreneurship Council’s chief economist.

Carolyn Smith, North Carolina state director of Working America, a community affiliate of the AFL-CIO, said the union has called on its members to urge U.S. senators to vote for a higher minimum wage.

“Everything else is going up except wages,” Smith said.

Staff writer Virginia Bridges contributed.

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