Clay Knight, the owner of Todd’s Big Star, thinks the minimum wage could be raised – but not to $15 an hour. “It would probably cut out all our sack boys,” he said of the grocery sackers, most of whom are high school students who often help customers take their purchases to their vehicles. “Do they need to be paid more? Yeah, they’re probably worth more than that for the service.”
Knight and store manager Joey Cole said increasing the minimum wage would also likely mean boosting pay across the board. This also leads him to feel a $15 minimum wage is unworkable. “But if you pay a sack boy $15 an hour, you’re going to have to pay a meat cutter $30 an hour,” Cole said.
The current minimum wage took effect a decade ago in a three-year phased increase starting in 2007. For the previous decade, it was $5.15, but from 2007-2009, the minimum wage rose to $5.85 to $6.55 then $7.25.
As a small business owner, Knight said controlling costs is critical, especially in the low-margin grocery business. Having across-the-board-raises, tied to a minimum wage hike would lead to product price increases, according to Knight. “Then you’d have to raise prices, and it won’t be $7.99 ribeyes anymore, they’ll be $15.99. And you’ll have $2 cans of corn,” he said.
Despite concerns by many businesses small and large over a minimum wage increase, more than two-thirds of Americans think the minimum wage should be raised to $15, according to a recent Pew Research Center poll.
And in July, the Democrat-controlled U.S. House of Representatives passed a bill that would do that by 2025. The GOP-controlled Senate is unlikely to pass it, however. The bill also calls for eliminating “sub-minimum wages” for students and the disabled, and mandating tipped workers have the same hourly minimum wage as everyone else.
The federal minimum wage has existed since 1939, when it was set at 30 cents an hour. It’s been raised 23 times. In 29 states, the minimum wage is higher than the federal rate. That’s not the case for Mississippi. For workers on the job full time at 40 hours a week, that equals $290 a week, or $15,080 a year.
Most jobs in the service industry – retail, hospitality, food service, transport, distribution – start at or near minimum wage, although experience can bring higher pay. The theory behind minimum wage is that workers can advance and find other jobs paying more, but what if the opportunities aren’t there?
“I’d like to make more and get a better job, but I don’t hear back from a lot of places I apply at, and then I’m told I’m not qualified enough for some,” said Angela Marshall, who said she’s been working her fast-food job for four years.
According to the non-partisan Congressional Budget Office, raising the federal minimum wage to $15 by 2025 would bump up the paychecks of 27.3 million low-income workers, increase the collective income of working-class families by 21.9 billion and lift 1.3 million Americans out of poverty.
But the CBO also suggests the increase would cost the U.S. economy 1.3 million jobs, “reduce the nation’s output slightly,” and trigger price increases that would lower total family income by 0.1 percent. For proponents, however, the benefits outweigh the costs.
“For people who have a hard time paying their bills, I think every little bit helps,” said Darren Baker, who works at a retail store during the day and at a restaurant several nights a week. “I make a little more than minimum wage now, but not much. And the other place it’s all about tips. Sometimes it’s good, sometimes it ain’t.”
State minimum wages
Meanwhile, this year, 20 states will see an increase in their minimum wage, ranging from a 5-cent inflation adjustment to a $2 per hour increase. About 5.2 million workers will be affected, and for those who work year-round, it will raise their annual pay between $90 and $1,300, according to a recent Economic Policy Institute report.
Of the 20 states increasing their minimum wage in 2019, six – California, Delaware, Massachusetts, Michigan, New York and Rhode Island – are increasing wages thanks to laws set by their state legislatures, according to the left-leaning EPI.
In Arizona, Arkansas, Colorado, Maine, Missouri and Washington, voters approved a minimum wage increase, while eight states – New Jersey, Ohio, South Dakota, Vermont, Alaska, Florida, Minnesota and Montana – raised the minimum wage through automatic adjustments for inflation.
With the unemployment rate low nationally, statewide and locally, employers are finding it difficult to find applicants willing to work. And for those businesses offering minimum wage? “They’re not filling those positions,” said Julianne Goodwin, co-owner of the Express Employment Professionals staffing agency.
Express has been working with business and industry of all sizes for more than 30 years in Tupelo, and Goodwin and her husband, Jim, have owned the franchise here since 2006.
“Anybody who’s paying less than $10 an hour is having a tough time finding employees,” she said, “because we have other clients who are paying $11, $12, $13.50 an hour. The unemployment rate is so low, and the people actually looking to work and who go to work regularly, if they’re making $9 an hour, they’re going to leave elsewhere paying $9.50 or $10.”
Goodwin said that many businesses understand they have to pay more to attract workers, but it’s still not easy with such a tight labor market. Compounding the problem is that the labor participation rate – the number of people available for work as a percentage of the total population – is at a meager 63 percent.
It’s even lower in Mississippi, which also is hampered by a high number of people too sick or disabled to work. For example, 13.2% of those aged 56 to 60 cite those reasons for not being in the labor force. The level of sickness is highest in Mississippi, Alabama, Kentucky and West Virginia, with the two most common illnesses diabetes and high blood pressure. “No one has a pool of people sitting there anymore from which to hire,” Goodwin said.
The agency’s clients are averaging $12.66 an hour, compared to the overall average in the region that’s about 60 cents more. “It’s supply and demand – average pay is going up because the number of people available to work is decreasing,” she said.
Ten years ago in the midst of the Great Recession, the greatest economic downturn since the Great Depression, the situation was far different. With double-digit jobless rates, staffing companies like Express and others were filled with people looking for jobs – any jobs.
“Back then so many people were looking for work, we only did interviews in the morning so we could try to fill jobs and send people in the afternoon,” Goodwin said. “If we thought about that now, it would be nuts.”
Express currently has more than 50 jobs listings with various businesses who are unable to fill the spots. Applicants can come by at anytime, but there still are not enough qualified people. “It’s so different now. We had clients back in 2008 and 2009 who were paying $7.25, $8, $8.50 an hour,” Goodwin said, adding that those trying to pay the same today, aren’t finding many takers.
Boosting the minimum wage might be part of the solution. Jumping to $15 an hour could be problematic, however. “That would be difficult here, as each part of the country has a different economy,” Goodwin said. “But the average wage is going up here, which is a good thing.”
Knight at Big Star says perhaps another phased increase of the minimum wage would work the best, although he still thinks $15 would be too steep to absorb. “I think it could go up another dollar, but you can’t go too far too fast,” he said. “It’s a lot easier said than done.”