Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, March 31, 1990 TAG: 9003310137
SECTION: BUSINESS PAGE: A7 EDITION: METRO
SOURCE: GEORGE KEGLEY BUSINESS EDITOR
DATELINE: LENGTH: Medium
Inflation and competition in the labor market have forced many companies to raise their starting pay to the upper $3-an-hour or $4-level, above the new minimum.
The boost from a minimum of $3.35 to $3.80 will cost some food stamp benefits, "more likely a reduction rather than wiping them out," said Corinne Gott, superintendent of the Roanoke Social Services Department.
She said the increase will lower food stamps when pay goes up but she has no estimate of the number affected in Roanoke. Gott's department watches pay stubs and makes "constant adjustments" as income changes.
"Most people working are above $3.35 today," she said.
The additional 45 cents an hour will bring an increase of $900 a year, before taxes, for about 3 million workers. But they still will be short of the federal poverty level of $8,400 for one person.
Poor families often spend about $400 a month for housing and utilities - more than half of their income - "so you can see what kind of a bind they're in," Gott said. "Any illness can wipe them out."
Look at the homeless and the lack of medical attention "and we are going backward. Families are losing ground. There is a larger gap between the haves and the have-nots than there was 10 years ago," she said.
In Washington, the AFL-CIO called the 45-cent raise, the first change in minimum wage since 1981, "a small step for the working poor . . . long-overdue increase."
On the other side, the U.S. Chamber of Commerce, a strong opponent of minimum wage legislation in Congress, claims that increasing the pay floor "will do more harm than good."
An increase in the cost of low-skilled, entry-level workers will mean a decrease in the demand for them, the chamber said.
The national chamber estimates that the minimum wage increase could result in a loss of 6,549 jobs in Virginia and 186,292 in the nation this year. Also, a ripple effect will increase wages throughout the pay scale, as well as at the lower end, causing employers to trim their work forces, according to the chamber.
Gott of the Social Services Department sees this as "baloney . . . propaganda."
If an ice cream store has three young employees, a higher minimum wage will not force the manager to lay off one, she said. If business is good, the manager will need all three and if sales are off, the third will be laid off anyway.
The chamber agrees that there will be little net effect on "those low-wage workers fortunate enough to keep their jobs." But higher wages will lead to higher prices paid by consumers so there will be little or no gain in buying power, according to the chamber's assessment.
Employers have raised their starting pay because of "an increasingly tight labor supply," said Marjorie Skidmore, job services manager for the Virginia Employment Commission in Roanoke.
Mike Sloan, operations manager for seven Burger King restaurants in the Roanoke Valley, said new employees start at $4.25 an hour for slots of 20 to 30 hours a week.
The labor supply has been steadily getting worse in the last five years, Sloan said. Many employees are working at a second job.
His competitors are paying $4 to $5 an hour, he said.
The 45-cent raise will not affect McDonald's restaurants, paying an average of $4.34 an hour, according to Blake Lee, Virginia marketing manager.
Lee said his company-owned and franchised restaurants are getting the employees needed. Older, middle-aged and young people are working in the restaurants, Lee said.
McDonald's does not recommend that its restaurants use a new training wage of $3.35 an hour for teen-agers on their first jobs.
Record-keeping for the training wage is very complex and any savings is not worth the trouble, Lee said.
Skidmore of the VEC expects that employers "won't want to fool with it [the training wage]" because of the documentation requirements.
The addition of another 45 cents, raising the minimum wage to $4.25 an hour a year from now, probably will have a wider impact, according to observers of the labor market. This will bring the minimum above the starting level at more companies.
by CNB