Maximum opposition in Shelby to minimum-wage increase

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Concept of increasing the minimum wage to $10.10 per hour is seen by some as big problem.

By Todd Martin

On Wednesday, President Barack Obama signed an executive order raising the minimum wage for federal contract workers to $10.10 per hour starting in 2015, with new contracts, a promise he had made during his State of the Union Address in January.

Obama also took the opportunity to encourage others to do the same.

“I would ask any business leader out there, any governor, any mayor, any local leader listening: Do what you can to raise your employees’ wages,” he said during the press conference. “It's not going to depress the economy. It'll boost the economy.”

And the Kentucky House of Representatives has put the state on the path to follow the president’s request.

House Bill 1, which would incrementally raise the minimum wage in Kentucky to $10.10 by July, 2016, was approved, 55-44, last week, moving the bill to the Senate State and Local Government Committee on Wednesday.

The bill represents an increase of nearly 40 percent over the current minimum wage rate of $7.25. That means an employee working 40 hours a week would see their yearly wages increase from $15,080 to $21,008 in 2016.

But locally the plan doesn’t seem to be picking up much support, at least in its current form.

“I understand that they [minimum-wage workers] need a raise; I don’t want anyone living in poverty,” said Bernice Dixon, who owns and runs the Dairy Queen restaurant on Midland Trail in Shelbyville. “But I don’t think they [legislators] understand the impact it’s going to have on businesses, especially small businesses like mine.”

The bill would raise minimum wage in the state to $8.10 on July 1 this year, then to $9.15 on July 1, 2015 before stopping at $10.10 in 2016.

“I believe we do need an increase, I do, but something that gigantic like that will really put a hurt on small businesses,” she said.

Opponents claim that the increase would cost jobs and further slow an already stagnant economy.

“I think it’s going to artificially raise inflation and raise the prices of goods and services,” state Sen. Paul Hornback (R-Shelbyville) said. “Not to mention that it could put us at a competitive disadvantage with other surrounding states that don’t increase. This is something that needs to be handled on the federal level.”

Many opponents of the increase have cited school districts as areas that will be most heavily affected by the increase in minimum wage.

And although Shelby County Public Schools currently pays its employees more than minimum wage, a change would certainly affect its budget.

“While SCPS currently pays all its employees above the minimum-wage rate, our pay scales are based on market rates,” said Greg Murphy, the district’s director of finance. “A change in the state’s minimum wage would amount to a market-rate increase. This would likely cause us to reevaluate our pay scales.”

Hornback added that there are several opportunities for workers to improve their wages but that they aren’t being taken advantage of.

“I think there are opportunities for most any worker to improve their situation without the minimum wage changing,” he said. “If they’re willing to work harder or improve their education or work on their skills, there are opportunities to advance.

“I know of several vacant jobs in Shelby County right now, good jobs, that employers aren’t able to fill. Workers either won’t show up or can’t pass a drug test. They don’t have the ‘soft’ [non-technical] skills to take advantage of these opportunities. Until they’re willing to improve and work on these skills, it won’t matter what the minimum wage is.”

Minimum-wage workers

In 2012 Kentucky’s portion of hourly paid workers earning at or below the federal minimum wage was 5.2 percent of nearly 1.15 million workers, ranked near the middle of the 50 states, according to the U.S. Department of Labor, Bureau of Labor Statistics, Kentucky.

In 2006, the state recorded its lowest number of minimum- or below-minimum-wage employees with 26,000, or 2.2 percent of the hourly workforce. That number steadily grew to an apex of 8.1 percent in 2009 before decreasing in 2011 and 2012.

For the past 10 years, the state has had many more workers earning below minimum wage than at minimum wage. In 2012, for the first time, the state had the same number earning at minimum wage as below minimum wage, 30,000 workers each.

Of those 60,000 earning at or below minimum wage, about 70 percent are women.

Kentucky is one of 22 states with a minimum-age law setting rates the same as the federal rate, and four states have a law setting minimum wage lower than the federal rate. Eighteen states and the District of Columbia have laws setting the minimum wage rate higher than the federal government.

In Shelby County, workers are earning on average of $18.33 per hour, ranking 29th in the state, $1.20 less than the state average, according to the Kentucky Labor Market Information. That total, however, includes salaried workers as well. That

Affecting young workers

Although many associate minimum-wage workers with high school and college students, that’s not necessarily the case.

In the Bureau of Labor and Statistics 2012 report, workers under the age of 25 represented only about one-fifth of the hourly paid employees nationally, but those employees made up about half of those paid the federal minimum wage or less. Of teenagers employed by the hour 21 percent earned minimum wage or less, compared with about 3 percent of workers age 25 and over.

Hornback said he wondered if those young students would be included in that raise to $10.10 per hour.

“They’re working part time while in school. Are we going to raise their wages to ten-ten per hour, too?” he asked.

Dixon said her Dairy Queen – which is known for hiring dozens of students and working around their school and extracurricular schedules – would have to stop that process.

“Hiring high-school students would have to come to an end,” she said. “I won’t be able to afford to work around their schedules. If I’m going to have to pay someone ten dollars an hour, I’m going to have to have adults that can be here when I need them. And that’s sad. High school students make up probably forty percent of my hiring now. But I’m going to need people that can work a regular schedule.”

Trickle down

And Dixon said she’s likely she would have to pass along the increases to customers.

“It’s not only going to be hard on labor, but we’re going to get it handed down to us, too,” she said. “Our vendors are going to see increases, and they’re just going to pass that increase on to us. At some point that dollar-ninety-nine hamburger is going to five dollars.

“It’s nothing personal, but businesses are going to have to pay the bills, too.”