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Minimum wage hike plan gets mixed reviews

Tuesday, February 19, 2013

By PAUL COLLINS - Bulletin Staff Witer

President Barack Obama’s proposal to increase the federal minimum wage is drawing mixed reactions.

According to the Office of the White House website, the president is asking Congress to raise the minimum wage from $7.25 to $9 in stages by the end of 2015 and index it to inflation after that. His proposal would directly boost wages for 15 million workers, the website states

Kim Adkins, executive director of the West Piedmont Workforce Investment Board in Martinsville, said of the proposal, “From a work-force standpoint, I think that would be good for individuals in our community.”

The average wage regionwide is a little more than $10.50 an hour. Raising the minimum wage “probably would bring up the overall average and give individuals more opportunity to make a better living and opportunities for their families,” she said.

From an industry standpoint, the region’s largest employment sector is manufacturing, which typically already pays above minimum wage at entry level, she said. Minimum wage entry-level jobs tend to be more in the service sector, she said.

“Overall, for quality of living in the Martinsville area, a higher minimum wage would be a good thing,” said Adkins, who also is mayor of Martinsville.

But some people are concerned that an increase could hurt small businesses.

“Any small business would have trouble adding staff with a raise in the minimum wage that large. From $7.25 to $9 is just a huge jump and would prevent a great deal of businesses — for that matter, large and small — from adding staff,” said Dick Ephgrave, director of the Longwood Small Business Development Center in Martinsville. “A lot of new jobs created in the economy come from small businesses,” he added.

However, he added, “I could support (a minimum wage increase) in much smaller numbers.”

Guy Stanley, chairman of the Martinsville-Henry County Chamber of Commerce, said raising the minimum wage that quickly will affect small businesses more than anyone. “It’s going to affect a lot of our businesses. Most of our members are small businesses,” he added.

Large companies tend to pay higher wages, he said.

Mark Heath, president and CEO of the Martinsville-Henry County Economic Development Corp., said increasing the minimum wage tends to have the biggest impact on entry-level, retail and part-time jobs. But he said he does not know how it would manifest itself locally.

Shawn McAvoy is an assistant professor of history and religion at Patrick Henry Community College. He formerly was an office manager and was in corporate mid-level management, he said.

“I like the idea in the abstract of people getting a livable wage,” he said. But, he added, “I haven’t ever seen a time that wages went up that prices didn’t go up.”

McAvoy said he would hate to see “an inflationary spiral because we have to pay people (more).”

“For the Martinsville area in particular, so many people don’t have jobs. They won’t benefit from” an increase in the minimum wage, he said. “Prices may keep going up, leaving them further behind.”

Ninth District U.S. Rep. Morgan Griffith said in a statement to the Bulletin: “We all want to see more people employed, and employed in jobs that provide them with good wages. I will certainly review proposals related to the federal minimum wage, and will review the president’s proposal when it is introduced as legislation.”

But he said a balance must be struck between the need to create more jobs at good wages and a higher minimum wage that would increase businesses’ costs.

“The impacts on businesses in a position to grow would be particularly burdensome. Higher costs translate into businesses being unable to afford to hire new employees as soon as they otherwise would,” Griffith stated.

“In an economic downturn, we need to get people working again. So, in order to increase the minimum wage and not negatively affect hiring, you need a situation with low unemployment and a strong underlying economy. Unfortunately, those conditions don’t exist in most parts of the United States — including Southside and Southwest Virginia —– right now,” the congressman added.

Griffith pointed out that in North Dakota, where unemployment hovers around 3.2 percent due in part to the oil boom, McDonald’s is paying $15 an hour, more than double the minimum wage, to attract employees.

“A strong economy powered by an energy revolution has essentially made minimum wage laws obsolete in North Dakota. In our area, McDonald’s restaurants pay approximately $7.50 an hour for new workers,” Griffith stated.

He added: “North Dakota demonstrates what is possible for American workers if we stop handicapping our energy development by overregulating and focus on growing our economy and stimulating job growth. As the saying goes, ‘a rising tide lifts all boats.’ I will continue to work to create an economic environment which will allow a national rising tide.”

Fifth District U.S. Rep. Robert Hurt said in a statement to the Bulletin: “Families and small businesses in Southside Virginia need jobs. Unfortunately, I fear that the president’s proposal will not help create an environment for job growth, and, instead, will simply make it more difficult for employers to be able to keep their current workers and hire new ones. While I was pleased to hear the president focus on the economy in his recent speech, his record shows that we need actions more than words. I look forward to considering any proposal by the president that will promote job growth.”

William Dunkelberg, chief economist for the National Federation of Independent Business, said the increase would hit businesses hard and only hurt low-wage workers by reducing demand for their services, The Associated Press reported.

“The higher the price of anything, the less that will be taken, and this includes labor,” Dunkelberg said. “Raising the cost of labor raises the incentive for employers to find ways to use less labor.”

The government first set a minimum wage during the Great Depression in 1938. It has been raised 22 times since then — the last increase went into effect in 2009 — but the value has eroded over time due to inflation, the AP reported.

 

 
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