Minimum wage increase takes effect

Local News

July 27, 2009

By Wade Coggeshall The Hendricks County Flyer Mon Jul 27, 2009, 04:11 PM EDT

A 70-cent hike in the federal minimum wage rate took effect Friday. While some employees making the previous hourly scale of $6.55 are likely to rejoice a raise to $7.25, some business owners will not.

Larry Herring, owner of Frank & Mary’s restaurant in Pittsboro, said any increase in minimum wage is “definitely an inflationary thing. We have to raise our prices to meet the cost.”

Chris Spires, who owns the Chick-fil-A restaurant in Plainfield, agrees. Most of his employees were making more than minimum wage until this latest rate hike.

“What’s happened with this new increase is we’ve run into employees who’ve been with us a while are now suddenly making minimum wage again,” said Spires.

Other workers who have been at the business for a time but are not making much over minimum wage also start clamoring for a raise.

“From now on, because of where we’re at, we’ll probably be starting more people off at minimum wage,” said Spires.

Indiana is one of 31 states affected by the minimum wage increase. Other states — such as California, Illinois, and Ohio — have rates higher than the fed’s.

A chief argument for mandating a minimum wage is to keep workers with families out of poverty. The U.S. Bureau of Labor Statistics doesn’t compile data on the number of workers making at or below minimum wage who also have children. But in its 2008 figures, there are 471,000 workers nationally who are married and making at or below minimum wage and are 25 years or older. For those 16-24 years who are married, it’s 61,000.

At 25.9 percent, the age group 20-24 has the highest percentage of workers at or below minimum wage. Those ages 16-19 come closest to that at 24.5 percent. An overwhelming majority of minimum wage workers (57.9 percent) have a high school diploma or less. The majority of them also work in food service.

That kind of data bothers business owners like Herring the most.

“They’re saying raising (minimum wage) is for those raising families,” said Herring, who employs about 30 minors. “Well my 16-year-old employees aren’t raising families. It really needs to be based on those 18 and older. Ultimately you don’t hire as many kids. You start to get rid of them, then they don’t get to make any money. It puts them back out on the streets.”

Added Spires, “The majority of people who make minimum wage are teenagers. This argument that families can’t survive on minimum wage — most families aren’t making minimum wage.”

In fact Spires tries to hire employees as young as 14. He’s no longer sure if he can do that.

“The thought is I can give them their first job and mold them into an employee that would be with me for three or four years,” he said. “But when you’re talking $7.25 an hour, that’s tough when you’re talking about a 14-year-old.”

In his presidential campaign, Barack Obama called for the federal minimum wage to increase to $9.50 an hour by 2011. Spires hopes that doesn’t become reality.

“I hope they don’t bump it again, because all it does is squeeze the middle class,” he said. “What inevitably happens is businesses have to raise their prices to cover their costs.”

wade.coggeshall@flyergroup.com

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