Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, March 31, 1991 TAG: 9103300025
SECTION: BUSINESS PAGE: E-1 EDITION: METRO
SOURCE: GEORGE KEGLEY BUSINESS EDITOR
DATELINE: LENGTH: Long
For employers, however, having to pay at least $4.25 an hour will add pressure to an already tight job market.
Overall, the increase is expected to have a minimal direct impact because many employers already are paying at least the new minimum wage.
The move, required by 1989 amendments to the Fair Labor Standards Act, could cause layoffs in this year of weak economy, said Marjorie Skidmore, Virginia Employment Commission job service manager in Roanoke.
Companies are holding their inventories down and cutting costs as much as they can in these tight economic times, she said.
But if some are paying $4 an hour, they must raise their wages, and they "will have to absorb that somewhere. . . . They may make do with fewer people," Skidmore said.
"A few but not many companies" will have to increase their lowest pay, said Mary Houska, a Hollins College economics professor. "What we are also seeing is that a lot of people can't find jobs." She expects job hunting will be difficult for young people this summer, and the market for college graduates "is dreadful."
It's hard to find employers who will admit that their pay is in the low range. Very few employers order jobs from the VEC at less than $4 an hour, Skidmore said. There's "a stigma" about low pay, she added.
Also, competitive pressure in the labor force is another factor pushing wages upward. The average pay for job openings registered through the VEC's Roanoke office on Franklin Road is from $5.40 to $5.50, Skidmore said.
Starting pay for 7-Eleven clerks has been at $4.25, "so I don't think [the minimum wage increase] will make a big difference," said Jim Boone, district manager for the Southland Corp.'s chain of 31 area stores.
"I'm sure there will be" upward pressure on employers as the wage floor is raised, he said. But Boone said he would hire 20 "qualified people" at once if they are available.
Probably only about 200,000 people in Virginia will get raises directly due to the higher minimum wage, according to William Mezger, research economist for the VEC in Richmond. The average hourly pay for all industries in the state is $10.70, he said.
Workers earning in the range of $3.80 to $4.25 an hour are probably in food service, at small companies or working in rural areas, Mezger said.
Randy Pritchard, marketing vice president for Boddie-Noell Enterprises Inc., operators of Hardee's restaurants, said his company has been "trying to get ahead" in wages since the minimum was raised from $3.35 to $3.80 a year ago. Most Hardee's employees are currently paid more than $4.25 an hour, he said.
At Stop-In Food Stores, the starting pay is $4.50 an hour, employees said. Only one or two Kentucky Fried Chicken employees in Roanoke earn less than $4.25, said Sarge Green, a consultant for the company. But pay there may be raised 10 cents an hour as a result of the higher minimum, he said. At the 9th Street Grocery in Southeast Roanoke, one of five employees will get a raise, the store manager said.
Skidmore said the minimum wage jump a year ago, from $3.35 to $3.80, wage had a greater impact because it was the first change in nine years. "If they hadn't waited nine years, they wouldn't have to do it [again] so soon," she said.
Houska said unemployment traditionally rises with the minimum wage, but she doubts that will happen this time. She blames the economy, not the minimum wage, for layoffs.
Indeed, fast food restaurants are scrambling for employees, particularly among older people, because the number of workers in the late teens is down as a result of the birth rate decline, Houska said.
After adjusting the higher wage for inflation, the minimum wage has actually declined in real buying power, Houska said. The gap between the minimum and the average pay in the 1980s was the worst since after World War II, she said.
Corinne Gott, superintendent of social services in Roanoke, said $4.25 an hour "is definitely an increase, but it won't cover all the bases."
Yet, if the minimum wage had been raised to cover all inflation, "we'd be out of jobs," she said.
For a mother with one child to get off aid to dependent children assistance, she would have to earn $6.50 an hour to be self-sufficient, Gott said. `With no education and no skills that are market-ready, she doesn't find many jobs," Gott said.
The minimum wage is still for entry-level jobs, she said. "If you have a family, you can't survive on it."
For example, Steve Cochran of Roanoke says he draws $4.40 an hour by working at a car wash, "and I'm still not making it." He's trying a second job as a taxi driver to meet expenses.
His wife, Darlene, was hired by a Wendy's restaurant at $4 an hour, but she was able to work only 10 hours a week because she had to care for her 6-month-old daughter. Her mother, Bettie Hatcher, of Lafayette, said she has to work two jobs from 4 a.m. to 4 p.m. in Montgomery County to make ends meet.
The AFL-CIO in Washington said the new minimum pay is "just over 41 percent" of the $10.34-an-hour average pay in the nation.
The new minimum will provide an annual income of $8,500, or $2,146 below the poverty level for a worker with two dependents, the labor organization said.
On the other side, Peter Eide, manager of labor law at the U.S. Chamber of Commerce, claimed about 489,000 jobs "disappeared" after the minimum wage increase last year, and he expects a similar impact after the increase Monday.
Eide said many companies hiring students "were forced by the economy to pay well above the minimum wage."
The U.S. Chamber is backing a move in Congress to restore an exemption to minimum wage laws for small businesses with annual revenue of up to $500,000. The exemption was dropped "inadvertently" by Congress, Eide said.
Along with the minimum wage will come an increase of 27 cents, to $3.62 an hour, in the "training wage" for young workers under the age of 20. But that scale is being used by only 10 companies in the nation. Skidmore of the VEC said apparently no Roanoke area companies use it.
The Bush administration said a training wage was needed to provide opportunities for young people and to help offset job losses caused by a higher minimum wage.
However, John Meritt, a senior vice president for the Hardee's restaurant chain, said the training wage requires so much "bureaucratic registration" that three more employees would be needed to handle the paperwork. "No one wants to do a minuet with the federal government," he said.
***CORRECTION***
Published correction ran on Tuesday, April 2, 1991\ Correction
Virginia's minimum wage is $2.65 an hour and it will increase to $3.65 on July 1. The state minimum will catch up with the federal minimum wage of $4.25 an hour on July 1, 1992. An inaccurate figure, provided by the Virginia Employment Commission, was reported in the Business section on Sunday.
Memo: correction