Report: Higher minimum wage paves road out of poverty
Jake Armstrong, Morris News Service
August 25, 2008
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The impact of an upcoming minimum wage increase would triple if the state surpassed federal limits
on what the nation's lowest-paid workers earn, according to a recent report by the Georgia Budget
and Policy Institute.
The federal minimum wage rose to $6.55 in July, as part of a three-year incremental increase that will move to $7.25 in July 2009. The report states that hike will boost the paychecks of 119,000 workers.
But if state lawmakers were to simultaneously increase the state's minimum wage to $8 by next summer, the increase would have three times the impact and benefit at least 337,000 workers, the report said.
A number of workers whose wages are higher but linked to the minimum wage would also see a raise, said report author Sara Beth Gehl, deputy director of the institute.
A week of work at a Taco Bell in Augusta leaves 18-year-old Jason Willis with just enough money to pay bills, give a little money to his mother, whom he lives with, and fill his gas tank for trips to work and Augusta technical College for classes to get his GED.
"I can't even move out of my mama's house, and I got a child on the way," Willis said.
Willis said he'd feel he was getting a fair wage if he earned more than the minimum.
"How am I supposed to make living making $6.55 an hour," he said.
An increase to $8 an hour next summer would add $30 a week to a full-time minimum wage worker's paycheck, for an annual salary near $15,300. The hike to $7.25 will add $28 a week.
But many businesses -- and their employees -- would lose out under a minimum wage higher than the federal limit, said George Israel, president of the Georgia Chamber of Commerce.
A higher wage may cause some businesses to cut hours for their workers or the number of employees, as well as reduce their level of competition with surrounding states at the federal limit, he said.
Israel said arguments a higher wage would lift the working poor are a "sham," because the increase would only trigger an inflationary spiral that raises the cost of goods the working poor buy.
"I don't think the working poor ever get out of that," Israel said.
Israel also doubted so many workers would benefit under such an increase.
An increase in the state minimum wage could help thin the ranks of Georgia's working poor, the report stated.
It cites that the roll of recipients for Temporary Assistance for Needy Families shrunk 69 percent in the five years leading up to 2007, while the number of adults receiving the benefit dropped 90 percent. A higher minimum wage would continue to help those families shift to the working world from government assistance, the report opined.
"It's one way to get working families on the road out of poverty," said Alan Essig, the institute's executive director.
Georgia's $5.15 minimum wage is now lower than the federal minimum wage, so exempted workers -- high school and college students, farm workers, waiters, newspaper carriers and a few others -- would continue to earn the lower figure after the July 2009 increase.
Many assume teenagers hold minimum wage jobs. But the report said that 85 percent of minimum wage earners in the state are 20 or older. Additionally, 63 percent are female and half work more than 35 hours a week.
Efforts to raise the minimum wage haven't fared well in the General Assembly.
Rep. Doug McKillip, D-Athens, sponsored a bill in 2007 to raise the minimum wage for covered employees at most companies to $6.20, an increase from $5.15 paid at the time, and to $7.25 in July 2008, with annual cost of living increases.
The bill never made it out of the House. McKillip said General Assembly leadership prevented it from getting a hearing in committee.
A similar measure by Senate Democrats failed that same year, and the minimum wage effort languished in the 2008 session.
McKillip said he'll meet with supporters of a minimum wage increase in the coming months and plans to introduce a bill to raise the wage in the 2009 session.
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