Fast-food waitress Fawn Townsend of Raleigh, N.C., knows what she is going to do when her salary goes up Tuesday with the increase in the federal minimum wage: start saving for a car.
“My goal personally is to get a vehicle so I can independently go back and forth to work and maybe pick up extra work, so I can have that extra income, because minimum wage is not cutting it,” said Miss Townsend, 24.
“Being a single person, you can’t pay all your bills with one minimum-wage job.”
Many lawmakers, along with advocates for low-wage workers, are celebrating the first increase in the federal minimum wage in a decade. Yet many acknowledge that raising it from $5.15 an hour to $5.85 will provide only meager help for some of the lowest-paid workers.
“The reality for a minimum-wage worker is that every penny makes a difference, because low-wage workers make the choice between putting food on the table and paying for electricity or buying clothes for their children,” said Beth Shulman, former vice president of the United Food and Commercial Workers Union.
“Saying that, it’s clear going up to $5.85 is not enough to really make sure that people really can afford the things that all families need,” said Miss Shulman, author of “The Betrayal of Work: How Low-Wage Jobs Fail 30 Million Americans.”
Minimum-wage workers will get an additional 70-cent boost each summer for the next two years, ending in 2009 at $7.25 an hour. That wage adds up to just above $15,000 yearly before taxes for a 52-week work year.
More than two dozen states and the District of Columbia already have minimum wages higher than the federal one. Even in those states, an increase in the federal minimum wage probably will have a ripple effect, increasing the salaries of Miss Townsend and others.
North Carolina raised its minimum wage from $5.15 to $6.15 in January.
“It’s a long overdue first step,” said Cindia Cameron, the national organizing director of 9to5, the National Association of Working Women, based in Milwaukee.
At the same time, employers who pay many of these low-wage workers say increasing the minimum wage only means they have to raise the prices of the products, cut back on employees’ hours or let some workers go.
“When you go into the grocery story now, you may be checking your own groceries, you may be bagging your own groceries,” said Jill Jenkins, chief economist for the Employment Policies Institute. “All of these things are because of mandated wage hikes. When you have to pay more, employers begin to find other options to keep costs down.”
Others say the effect on the economy will be negligible.
A PNC Economic Outlook survey done in April showed three out of four small- and middle-market business owners said raising the minimum wage would have little or no effect on their businesses.