Minimum-Wage Bump Helps Keep Consumers Spending

Florida’s minimum wage will go up 36 cents on Sunday, an increase that will inject an additional $284 million into the state economy next year.

If you’re one of the 380,000 Floridians earning the minimum wage, this boost to $7.67 an hour is cause for celebration and nearly $750 more in your gross annual income.

If you’re the business owner, your reaction might differ.

“Everything that goes up affects the cost of doing business,” said Jeb Stewart, owner of the Beef ‘O’ Brady’s restaurant at 1315 S. Babcock St. in Melbourne.

Waitpersons’ hourly pay will rise 36 cents an hour on Sunday, from $4.29 to $4.65. That means Stewarts’ payroll will grow by up to $748 a year for each employee.

“We’ll deal with it just like we deal with rising food costs,” said Stewart, who has coped with recession, rising food costs and a delayed professional basketball season. “We’ve been thrown curve balls all along. This is one more pitch we’ve got to take.”

Since voters approved a constitutional amendment in 2004, the state minimum wage must be adjusted annually with cost-of-living increases based on the rate of inflation. The increase will add $14.40 a week to the paycheck of someone working 40 hours a week. The yearly increase would total $748.80, while the worker’s yearly salary would reach $15,954.

Arizona, Colorado, Montana, Ohio, Oregon, Washington and Vermont are also raising their minimum wages on Sunday.

This is actually Florida’s second increase this year: A lawsuit by a workers’ rights groups led to a 6-cent increase in June. The group praised the benefits of the new increase.

“Putting more money into the pockets of these workers…will help sustain consumer spending and spur economic recovery,” Christine Owens, executive director of the National Employment Law Project, wrote in a statement.

“The minimum-wage increase is especially important when so many better-paying jobs in sectors like construction, manufacturing and finance have disappeared,” Owens said. “Floridians who do the hard work of cleaning and securing office buildings, providing day care and serving food will not fall further behind as prices for food, gas and utilities continue to rise.”

While some business organizations grumble about the cost to employers, most consumer-oriented groups support the wage increase, both because of the impact it will have on low-wage earners and because much of the money will be spent on goods and services, creating an economic boost.

“Ultimately, this will help offset some of the losses experienced by those who have seen no wage increase in the past few years but have seen prices increase,” said Pamela Hart, director of Consumer Credit Counseling Service in Melbourne.

“Now many of these consumers may be able to better afford rent or mortgage payments, debt payments as well as improve their quality of life overall.”

Raising the minimum wage is virtually the only way to help the least-paid workers keep up with inflation. And they must spend nearly all of the money they earn on essentials.

“They don’t have the ability to save,” said Mike Slotkin, associate professor of economics at Florida Tech.

Those who argue that a higher minimum wage prevents hiring don’t have a solid case for their argument, he added.

“There’s little evidence to show that,” Slotkin said.

In fact, some economists roundly dispute the claim that raising the minimum wage has any effect on employment.

“Employers are awash in cash, but they aren’t hiring because of the lack of current sales demand to justify expansion (or even labor replacement) and uncertainty about the future,” Mark Soskin, associate professor of economics at the University of Central Florida, said in an email.

Soskin believes raising the minimum wage will be beneficial.

“The cost to employers from the minimum wage is too small to depress hiring or cause layoffs,” he said.

Minimum-wage bump helps keep consumers spending. (2011, December 30). By Patrick Peterson. Retrieved from http://www.floridatoday.com/article/20111230/BUSINESS/312300019/Minimum-wage-bump-helps-keep-consumers-spending.

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