Although some Mississippians are earning more money as a result of last month’s increase in the federal minimum wage, that number is not large.
According to Marianne Hill, senior economist with the Institutions of Higher Learning, only 2.6% or 17,000 workers (out of a total of 658,000 hourly workers) in the state were paid at or below the minimum wage in 2004. The new federal minimum wage went to $5.85 per hour in July with future increases of $6.55 in the summer of 2008 and $7.25 in the summer of 2009.
Hill points out that the purchasing power of the minimum wage is approximately 20% lower than it was in 1998 and the lowest since 1960. “With the purchasing power going down, people making minimum wage are not keeping up,” she says. “The rationale behind the minimum wage is that it’s not a competitive wage but it’s a fair wage. It’s based on what employees bring to a company, and if a company is profitable, the wage should be enough to keep people above the poverty line.”
Already paying more
Businesses interviewed by the Mississippi Business Journal say they are paying more than minimum wage and for the most part don’t expect any impact from the new law.
“We have no one near the minimum wage and we won’t in the second phase of the increase,” says Andy Austin, director, human resources of Landau Uniforms in Olive Branch. “We’re not even close. All of our hourly employees are paid rates that are significantly above the minimum wage range. Our rates are competitive in the western Tennessee, eastern Arkansas and North Mississippi markets.”
He says this apparel manufacturer would not be able to attract and retain employees without that pay scale and is pleased to have a turnover rate that is significantly less than the national average. The company’s Olive Branch operation includes all headquarters departments, product design, prototype development, sales and marketing and the distribution center for all its products. In addition to healthcare apparel, Landau makes corporate identity apparel for national accounts, and it designs and markets work shoes.
Cadence Bank doesn’t have any employees making minimum wage either, says vice president and HR manager Amy West. “We’re at least one dollar above that,” she adds, “but the second phase of the minimum wage increase may affect us.”
That’s why the bank will most likely go ahead and address that possibility early next year when evaluations for its 520 employees are done in January and February. “We will do the evaluations for employees at all 39 locations and raises will be processed in April,” she says.
Lisa Slay, spokeswoman for Wesley Medical Center in Hattiesburg, says the higher hourly wages will have no impact on them. “It does not affect Wesley at this time as we have no employees at the minimum wage level,” she says.
But a small business owner in Gulfport feels it will affect his business even though he too pays employees above the minimum wage. Norbert Keppner has owned and managed Ally’s Café & Bakery with his son, Michael, for three years. Prior to that, he was in the restaurant business on the Coast for 25 years.
“The higher minimum wage makes it worse on small business people like me,” he says. “I’m already paying above minimum wage, but with it going up, employees will expect more. It’s not really going to help us.”
Keppner has only four employees now and has trouble keeping them in the competitive Coast marketplace. “Since Hurricane Katrina we’ve had problems and in this kind of business with a low-end wage situation it’s hard,” he says. “Businesses should pay employees what they’re worth, not what the government says.”
‘Concerned but optimistic,’ says nonprofit exec
Employees of Mississippi United Methodist Senior Services also make above minimum wage, but Steve Vinson, vice president for development, notes that a lot of what the non-profit organization does depends on charitable donations. “If our donors are affected, it affects us,” he says. “We’re concerned, but I’m optimistic. We pride ourselves on hiring people above minimum wage, and most of our employees, even at fundamental levels, are above that.”
With 600 employees statewide, Vinson says it takes a lot of people to provide care for the comprehensive array of senior housing options the organization operates.
Running the numbers
Hill says the majority of workers making minimum wage in Mississippi are women; 33% are white females and 36% are black females. Additional statistics reveal that 26% of people earning the minimum wage are single parents with children and another 19% are single earners without children.
“Most of these workers do have a high school education,” Hill says. “A lot of them have to stay in an area where they have family to help with childcare.”
Will there be an adverse impact on employment as a result of the minimum wage increase? Hill says it is difficult to isolate the effect of changes on aggregate employment.
“In Mississippi, there was strong employment growth immediately following the last minimum wage increase (1997-1998),” she says. “The minimum wage rose 21% over that two-year period. Nationally, studies of that period show little effect on employment.”
She adds that there seems to be some consensus of businesses who say they will have to cut back on hours as a result of paying the higher wages. “The positives more than offset the negatives of increased costs for businesses,” she said. “I think it will be good for increasing consumer demand, employment stability and helping alleviate problems associated with poverty.”
Contact MBJ contributing writer Lynn Lofton at email@example.com.