Teleasa Ellis got a 70-cent-per-hour raise Friday, thanks to a federal increase in the minimum wage.
Ellis, who works at The Wash House Laundromat in Rocky Mount, is among the local employees who had been earning the minimum wage of $6.55 per hour who said they are grateful for the hike to $7.25.
She said it’s a struggle to get by on her salary as she pays for diabetes and heart medication.
Considering her medical bills, the 70-cent raise won’t make her life much easier, but every little bit helps, she said.
“I thank God for it,” she said about the increase.
The federal minimum began increasing two years ago, when it was $5.15 per hour.
Supporters of the wage change say it will increase consumer spending by up to $5.5 billion as the economy tries to recover.
Local business owners have concerns about the increase.
Bill Lehnes, the owner of Chick-fil-A of Cobb Corners, said the restaurant likely will raise prices slightly to cover the increased labor costs.
“We are not going to allow our service to suffer because of a minimum wage increase,” he said. “We will increase prices to offset the difference. I think the plan corporately is to do it at 3 percent.”
Lehnes said considering the down economy and high local unemployment rate, it is not the best time for a minimum wage increase.
“Our sales are flat. That’s about the best we could say,” he said. “It’s certainly not good timing with the economy.”
Some economists say the hike could prolong the recession by forcing small businesses to lay off the same workers the pay hike passed in better times was meant to help.
It also means higher costs for employers.
In a telephone interview Friday, N.C. State University economist Michael Walden said it might have been better for the economy if Congress had increased the earned income tax credit rather than hiking the minimum wage. But he said increasing the tax credit for families with children also has a potential downside.
“That (tax credit) money is out of the Treasury, and government has a large budget deficit as it is. There are pluses and minuses,” he said.
He said there are also pros and cons to a minimum wage hike.
“The issue is clearly that if a worker continues to hold his job or her job, and gets a higher rate of pay, that allows them to spend more,” he said.
However, Walden said, evidence over decades of research shows that raising the minimum wage leads to higher unemployment rates among lower-skilled workers.
Walden said businesses pay workers what they think they are worth. When a business is forced to pay an employee a wage they feel is not justified, it might lay the employee off, he said.
“Given the tenuous state of the economy, you’ll likely see some job losses around the country due to the higher minimum wage,” Walden said.
Economists largely have overlooked the positive effect of the minimum wage increase on consumer buying power, according to Let Justice Roll, a national campaign aimed at increasing the minimum wage to $10 by 2010.
A further wage increase eventually could become a reality: One of President Barack Obama’s campaign promises included raising the minimum wage to $9.50 an hour by 2011.
In a press release, the organization states the minimum wage hike will help workers and the economy.
“Minimum wage raises have been so little, so late, that even with the increase to $7.25 on July 24, workers will still make less than the $7.93 minimum wage of 1956, adjusting for inflation,” the press release states. “It would take $9.92 to match the buying power of the minimum wage of 1968. That’s why the Let Justice Roll Living Wage Campaign says the minimum wage raise on July 24 is good, but not good enough.”
Even so, the raise is appreciated, local workers said.
“I’m glad for it. I can always use the extra money,” said Maurice Robinson, a dishwasher at the Highway Diner on Winstead Avenue.
Gail Stoddard, the restaurant’s general manager, said the wage hike will not affect the number of staff retained at that restaurant.
“We’re very busy with travelers, so right now I need the bodies, no matter what they are being paid,” she said.
Email this page
