News & Observer | newsobserver.com | Minimum wage rises to $6.55 today

Published: Jul 24, 2008 12:30 AM
Modified: Jul 24, 2008 05:21 AM

Minimum wage rises to $6.55 today

Most employers already pay more

 

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The nation's lowest-paid workers are getting raises.

The minimum wage, which has been $6.15 in North Carolina since the beginning of 2007, climbs to $6.55 today.

Even with that 6.5 percent increase, however, a minimum-wage worker still has to work more than 30 minutes to afford a gallon of gas. The increase amounts to about $800 a year for a full-time employee.

WHO'S AFFECTED: The youngest workers, including teenagers, and the oldest, retirees who are supplementing their income, are most likely to make minimum wage, said N.C. State University economist Michael Walden.

The federal Bureau of Labor Statistics estimates that 46,000 workers in North Carolina were paid the federal minimum wage or less last year. Nationally, about 2 million workers will now make 12 percent more, up from $5.85 an hour.

But raising the minimum wage will have a much broader effect because it will indirectly push up the pay of other workers who make a little more than the minimum, said John Quinterno, research associate at the N.C. Budget and Tax Center, an advocacy group for working families.

That's already happened at the Dunkin' Donuts in Fuquay-Varina. Last month, owner Bob Vaziri increased starting salaries to $6.75 an hour -- up from $6.35 -- in anticipation of the higher minimum.

"Even though it's not much of a difference, it actually brings a different caliber of employee," Vaziri said. "You start getting a few years older rather than just high school kids."

THE EMPLOYMENT PICTURE: Studies show that "raising the minimum wage over time reduces employment among minimum-wage workers," Walden said.

Faced with higher labor costs, especially coming amid a slowing economy, some employers will invest more in automation and cut jobs, he said. Or they might decide to hire a higher-skilled, more productive worker -- at a higher salary -- to replace multiple low-skilled workers.

Quinterno, however, contends the latest studies indicate a modest increase in the minimum wage has "little or no impact" on employment.

EMPLOYERS' POSITION: Alex Ramos, marketing director for Andy's Burgers Shakes & Fries and the owner of an Andy's franchise in Fuquay-Varina, said he and other franchise owners pay minimum wages to entry-level workers.

He said the higher minimum wage, on top of rising costs in general, means that keeping a close eye on expenditures is more crucial than ever.

"Now there is no safety net, so to speak," Ramos said.

There aren't many local employers that are able to pay only minimum wage, because of the Triangle's relatively low jobless rate. Lou Moshakos, owner of 14 restaurants across the state, said he already has to pay between $8 and $12 an hour to prep cooks and dishwashers to attract and keep good workers. Moshakos' restaurants include six Carolina Ale House locations, Taverna Agora in Raleigh and Bentley's in Cary.

"We'd get a different employee if we paid minimum wage," he said. "You'll get an employee who'll fill the shoes for a couple of days and won't come back."

THE GAP: The minimum wage hasn't been keeping up with inflation. The result: The gap between the minimum wage and the pay needed to support a family is widening. And with rising prices for fuel and food, any increase is likely to be eaten quickly by higher household costs.

THE QUIRK: Because of a quirk in the way federal and state wage laws interact, beginning today employers in North Carolina can pay workers who earn tips, such as waiters and waitresses, 30 cents an hour less than they paid yesterday. That's $2.13 instead of $2.43 -- as long as the worker can make up the difference in tips.

THE FUTURE: A year from today, the minimum wage in North Carolina and across the country is scheduled to rise again -- to $7.25 an hour.

david.ranii@newsobserver.com or (919) 829-4877
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