The federal government says 2 million American workers are getting a raise on Monday, Labor Day.
Employees who’ve been making $4.75 an hour will see a 40-cent-per-hour raise starting this week, when the federally mandated minimum wage steps up to $5.15.
But with the economy booming and a labor force stretched so tight, the question for many employers is not so much paying the higher wage, but, “Where can I find a worker?”
The national unemployment rate is at a low 4.8 percent; the state’s rate is 4.6 percent, after hitting a 23-year low of 4.4 percent in June.
With those numbers, it’s no surprise economists and executives are saying that anyone who wants a job–and is reliable enough to keep it for a month–can get one or, more likely, is employed already.
“The issue isn’t the $5.15,” says Joseph Milligan of the Illinois Manufacturers’ Association. “The focus is on, `Where do I find the people to pay?’ “
Some workers interviewed over the weekend who earn the minimum wage, or perhaps a few nickels more, were not even aware they would see an increase in their paycheck.
Felicia O’Neal, 25, earns $5 an hour pushing shopping carts and bagging groceries at the Jewel in West Town Center on Ashland Avenue. She was pleasantly surprised at the news of an impending raise.
The part-time worker said she could use the extra earnings to help support her 4-year-old-son.
One of the reasons she took the job at Jewel was because it paid more than her old job at a hardware store.
“The pay is really decent,” said O’Neal, while collecting shopping carts at the busy store. “But it could always be a little higher.”
From spring through summer of 1996, debate on a proposal to raise the federal minimum wage was intense in Congress.
A year later, the increase is going into effect almost in silence. That could be because the first phase of the increase, a 50-cent hike last October, was not followed by the layoffs or business closings that opponents said would follow.
In fact, amid tight labor markets, employers are pleading, “Show me the applicants.”
Milligan says some companies looking for even minimally skilled people “are ready to take warm bodies.”
The manufacturers association’s 1997 compensation survey of giant to small businesses shows the average hourly pay for the level designated as laborers, the lowest wage level, is $7.48. It’s $7.89 for the next level, production workers.
Across the country, the biggest groups of minimum-wage earners are women and teens. The stereotypical image is the busboy, the sales clerk, the cashier.
Like many youngsters who worked this summer, Raphaelle Ziemba, 17, a cashier at the Lake movie theater in Oak Park, will miss out on the extra earnings. This is her last week at the theater before she returns to school in Michigan.
“Since I’m still in school, the (wage hike) is not that big of a deal to me right now,”Ziemba said.
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In downtown Chicago, Tony Harris, 35, was washing the glass door at a Subway shop at 308 W. Randolph St. last weekend. The West Side resident has worked there full-time the last eight months–making sandwiches, cleaning and closing the shop.
He welcomed the raise.
“It’s not just good for me but for other workers too,” Harris said. “I’m not financially set, but I believe in helping the next person.”
Yet in the Chicago area, as well as in Minneapolis and Kansas City, the starting wages for Target employees are about $6 to $8, according to Susan Eich, spokeswoman for Minneapolis-based Dayton Hudson Corp.”
The lowest wage at Cafe Bon Appetit in the Loop is $5.50 an hour for dishwashers, according to general manager Chris Hill.
“And when they find out that maybe one of the Lettuce Entertain You restaurants is paying dishwashers $6 and $7 to start, they’ll take off,” Hill says.
At Mike Ditka’s Iron Mike’s Grille, just off Michigan Avenue, a spokesman says, “Kitchen and prep positions are in demand because of the lack of help out there. So you just can’t pay minimum wage.”
Serena Flores, 20, while filling a straw dispenser and cream container at Starbuck’s on Lake Street in Oak Park, said employees there start at a minimum of $6.55 an hour. Although the wage increase will not affect her salary, Flores welcomed it for the rest of the work force.
“I think it should be enforced,” said the student of musical theater at Roosevelt University. “There are places that hire (illegal workers) that don’t even pay the minimum wage, and that’s not right.”
And what do those wages do to the small-business owners competing for the same workers? Some owners say they already put in much more time than their employees and barely scrape a profit out of their businesses.
Will those owners put in more time themselves? If they raise hourly wages and then take away hours from employees, those employees may jump to other jobs.
In October, when the first of the two-part minimum wage increase took effect, 9.7 million workers were making less than $5.15 per hour, the Labor Department says. Currently, $5.15 is half of the country’s average hourly wage.
Yet as the Labor Department sees it, for someone making the previous minimum of $4.25 per hour, that translates to $1,800 more per year–which could mean seven months of groceries for a minimum wager or nine months’ worth of utility bills.
But the smallest of small-business owners will see it as $1,800 per employee–plus Social Security and worker’s compensation–added to their payrolls.
“It’s the micro businesses, the mom-and-pop card shops and businesses with under 12 employees that will feel the impact,” says Thelma Stevenson Alban, president of Stevenson Associates consultants in Chicago and also regional chairwoman of the White House Conference on Small Business.
Overall, however, what was such an issue last summer, according to job expert John Challenger of Challenger, Gray & Christmas Inc. in Chicago, “has been superseded by market forces.”