Should minimum wage go up?
Published 12:00 am Monday, February 5, 2007
Editor&8217;s note: The Tribune has moved its weekly business story from the inside of the Sunday edition to the front of the Monday edition. It&8217;s new name is &8220;Business Monday.&8221;
By Sarah Light, staff writer
Every week, 19-year-old Desiree Bolinger comes to work at Albert Lea&8217;s Ramada Inn, hoping to make a living for herself and her 6 month-old daughter.
Right now, the single mother&8217;s income relies on the 25 hours a week she works cleaning up rooms with the housekeeping department at the hotel, at a wage just above Minnesota&8217;s minimum wage.
&8220;It&8217;s tight,&8221; she said. &8220;Very hard.&8221;
She is one of thousands across the country who say their life could be positively impacted by a federal minimum wage increase.
If that wage were to increase, she said, she&8217;d be able to provide more for her daughter and maybe &8212; if at all possible &8212; actually save some money for her future.
&8220;We work really hard doing the stuff that we do,&8221; said her co-worker Amanda Grove, also 19 and a single mom.
Last week, the U.S. Senate voted 94-3 in favor of legislation that would raise the federal minimum wage to $7.25 an hour over a 26-month period and also provide tax breaks to small businesses.
The federal minimum wage has been at $5.15 an hour since 1997. Minnesota&8217;s minimum wage was boosted to $6.15 an hour in August of 2005 for large employers. For small employers, minimum wage in Minnesota is $5.25. In Iowa, the minimum wage remains $5.15.
If passed, the wage on the national scale would first increase to $5.85 an hour within 60 days after the bill is enacted. Then, 12 months after the first increase, it would increase to $6.55 an hour. Finally, 24 months after the first increase, the wage would increase to $7.25 an hour.
The U.S. House of Representatives approved the same legislation, minus the tax breaks, in January.
Although Grove and Bolinger make above the current minimum wage level, they make below the wage lawmakers propose. Thus, they, too, are likely to see an increase if the bill passes.
While the proposed wage would benefit individuals, some are afraid of the effect it could have on businesses.
Albert Lea Ramada Inn General Manager Cindy Meany said even though she supports the increase personally, it would &8220;definitely have a huge impact&8221; on the finances of her hotel and restaurant.
Probably 60 percent of the employees &8212; banquet servers, restaurant serves, dishwashers and housekeepers &8212; at the Ramada Inn are at the minimum-wage level, she said.
If the increase goes into effect, she said, the hotel would probably have to recover through an increase in food and room costs.
&8220;I think every place across the board would be raising their prices,&8221; she said. &8220;If everything goes up in price, the minimum-wage employees aren&8217;t going to be much further ahead.&8221;
Nancy Newman, owner of Nancy&8217;s Cafe in Albert Lea, said the increase would also have a large effect on her business.
&8220;It would hurt us,&8221; Newman said. &8220;We suppose we would have to raise our prices somewhere else to make up for it.&8221;
But if small businesses like her own would be able to receive a tax break &8212; as proposed by the Senate &8212; then she would probably be OK with it, she said.
Paul Sparks, the Albert Lea Economic Development Agency executive director, said he thinks the impact of an increase would be &8220;somewhat negligible&8221; because it has been quite a while since the minimum wage has increased.
&8220;I think that most places are already paying more than the minimum wage,&8221; Sparks said. &8220;In order to hire people and get them to stay with you, you have to pay more than that.&8221;
Tami Riecke, operations manager of the Albert Lea-Freeborn County Chamber of Commerce, said the organization is in the process of conducting an internal membership survey of chamber businesses to see how the proposed wage increase could affect them.
&8220;Most businesses that have responded have indicated that it will have minimum effect,&8221; Riecke said of the results that have already been compiled. Final results are still under way and might be released to the public, depending on what the process determines.
In the meantime, the Senate and House will work to achieve a compromise before sending the bill off to President George W. Bush for a signature.