ATLANTA -- Democrats’ proposal to boost the federal minimum wage from $7.25 per hour to $10.10 would have the biggest impact in Georgia and surrounding states than in other parts of the country, according to a new study.
The party is hoping to make it an issue in this year’s Senate election, and its Georgia nominee, Michelle Nunn, tells supporters at every stop that she supports the increase.
“We need to raise the minimum wage, and we need to do it in a constructive way, and we need to do it in concert with business interests,” she said. “But I think it’s really important that people have a livable wage and that we really give people an opportunity for self-sufficiency.”
The Republicans hoping to face her in November each oppose a mandatory increase in wages. Both David Perdue and Jack Kingston argue it is just another hurdle plaguing employers.
“An increase in the federal minimum wage would present one more such roadblock and make it harder for entry-level employees to get their foot on the economic ladder,” said Kingston spokesman Chris Crawford.
Perdue spokesman Derrick Dickey offered a similar message from his candidate.
“The best way to raise wages is to focus on overall job creation and to create more quality jobs which will do more to raise wages,” Dickey said.
Equifax Inc. the Georgia-based credit-reporting agency, issued the analysis Thursday which is based on data it has on 54 million workers at more than 3,000 employers of all sizes. That’s roughly 40 percent of the U.S. workforce.
Among the findings is one showing the average hourly wage increase in Georgia would be 4.3 percent, 4.2 percent in South Carolina and the peak in Mississippi at 4.4 percent. In Oregon, it would be less than 1 percent, 1.3 percent in New York and 2 percent in California.
That’s because in other parts of the country, more workers already earn above the minimum wage than in the South.
So, workers here could get a bigger benefit. It also means employers here would face a bigger cost, which they could meet by raising prices, reducing hours, cutting jobs or shrinking profits.
“Some people are going to lose jobs while others are going to enjoy a wage increase. What I can’t tell from Equifax data is which,” said Amy Cutts, the company’s chief economist and lead author of the report.
Organized labor argues that Georgia companies can afford to boost wages. Chief executives of public companies in the state made more than 700 times the minimum wage last year, a time when the country’s largest companies averaged $41,000 in profits per employee, according to AFL-CIO research.
Georgia will be among the biggest winners from an overall economic boost created by the wage increase, according to Charlie Flemming, president of the Georgia ALF-CIO.
“To non-economists like myself, this makes perfect sense,” he said. “If working people have money to spend, they don’t sock it away for a rainy day, or to save up for a yacht. They spend it. They have to. They have no choice. They spend it at the grocery store and the gas station and all the other businesses, large and small, that make up their communities.”
To an actual economist, it won’t work quite that way.
Jeffrey Dorfman, a professor of applied economics at the University of Georgia, jobs will be lost and prices will rise. At a fast-food restaurant where nearly one-third of its costs go to personnel, the proposed 20 percent boost in the minimum wage translates into a 4-5 percent increase in the price of meals, which will hit the hardest among the low-income people Democrats say they’re trying to help, he argues.
Dorfman notes that the report isolates who actually is getting the minimum wage.
“Equifax’s numbers do a good job of showing how most of the workers that would be impacted are either quite young or quite old,” he said. “These are assumedly part-time workers with other family income (either parents or pensions) who do not depend on these jobs for economic survival. These numbers weaken the case for raising the minimum wage considerably.”
The report shows that 93 percent of teenaged workers and about half of those in their twenties earn less than the proposed minimum wage. In other age groups, roughly eight in 10 workers earn more than the target wage, leaving about 20 percent of workers over age 30 earning somewhere between the $7.25 and $10.10 an hour. More than one-third of hourly workers over age 70 also earn less than $10.10.
The data also reveals patterns in the mobility of hourly workers. By looking at workers who left one employer in the database and found a job with another one within a month, Cutts’s team discovered that those moving to another hourly job averaged a 26 percent increase in pay, and two out of three making what appeared to be voluntary job changes improved their paychecks.
The odds of a raise -- and a bigger one on average -- went to those who left hourly jobs for a salaried position. Three-fourths bettered their circumstances with an average of 39 percent more money.
Some conservatives argue that the minimum wage is designed as a starting point for inexperienced workers and that those who hustle climb their way up the pay scale.
While workers can benefit from turnover, the report showed that employers can suffer from it in terms of training costs, poor customer service and low morale. And pay isn’t the only reason staff leave.
Limited hours also play a part. Bosses that offer workers more hours have less turnover, according to the report. Each hour added to the workweek drops voluntary turnover 5 percent, Cutts notes.
“If they’re not paying attention to the bottom line of worker turnover beyond the paychecks that they’re writing... turnover will cost them more in the long run than the extra hour they’re giving them,” she said.
Should Congress raise the bottom wage, employers who reduce hours to save on payroll may feel the pinch in increased turnover, she said.
A copy of the complete Equifax report is available online: http://www.equifax.com/assets/WFS/miinimum_wage_wp.pdf
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