Wednesday, January 07, 2015

TOP STORY >> Minimum wage rising

Leader staff writer

Almost 170,000 Arkansans received a 25-cent bump in their hourly pay last Thursday, thanks to voters in November who passed an initiative raising the state’s minimum wage from $6.25 to $8.50 an hour by 2017.

The first hike, effective Jan. 1, was to $7.50. That rate now supersedes the federal minimum wage of $7.25.

Media and supporters touted bipartisan support for the initiative.

Stephen Copley of Little Rock, who spearheaded the effort to get the measure on the ballot, said, “For me, it’s exciting because now folks that are working hard every day will see more money coming on their check, more money to make ends meet…In some way, this makes their life a little bit easier.”

Then he directed The Leader to Eleanor Wheeler, a senior policy analyst with Arkansas Advocates for Children and Families.

Wheeler composed a report on the impact of a minimum wage increase. It was released in January 2014, ahead of the November vote.

According to the report, the almost 170,000 employees who will be affected directly or indirectly by the pay increase make up about 15 percent of the state’s workforce.

The report also concludes that 20 percent of single parents in Arkansas and 87,696 — one in 10 children — have at least one parent who will be paid more because of the minimum wage hike.

Also, 85 percent of the workers affected are over 20 years old and many are at least 30. Wheeler’s report states this after explaining that teenagers working part time to earn spending money do not make up the majority of those affected. Some opponents have suggested as much.

Michael Pakko, chief economist and state economic forecaster at the University of Arkansas at Little Rock’s Institute for Economic Advancement, said the recent 25-cent bump wouldn’t have “significant consequences, either positive or negative.”

But, he argued, it will have a larger impact over the next two years in its climb to the $8.50 rate.

Pakko said the increase would eventually result in “reduced availability of jobs.”

He told The Leader that a 2009 study released by the National Bureau of Economic Research draws that conclusion.

Wheeler’s report disputes that, stating, “There is a strong consensus, particularly among the most rigorous of these studies (used to compose her paper), that a minimum wage increase will not lead to significant job loss.”

It also claims research shows a wage increase will in-crease “profit-pumping essentials like work performance, employee morale and customer service.”

Wheeler uses the retailer Costco in her report as an example of a company that benefits from paying a “living wage.” Its workers make an average wage of $20.89 an hour.

Costco President and CEO Craig Jelinek supports raising the federal minimum wage, Wheeler writes. The report states that he told Congress, “We know it’s a lot more profitable in the long term to minimize employee turnover and maximize employee productivity, commitment and loyalty.”

The report also notes that Costco is doing well, with its stock price from January 2009 to January 2014 having gone up 135 percent.

About passage of the minimum wage increase, Wheeler said this week, “We were all really thrilled. This is a great step forward for Arkansas.”

Her report begins by stating that, although there have been periodic increases to the federal minimum wage since the 1960s, inflation has caused the purchasing power of those dollars to drop, with the real value of the minimum wage being $3 less than it was four decades ago.

The report states that, if minimum wage had kept up with inflation, it would be more than $10 an hour instead of the $7.25 it is today. And Arkansas was one of only nine states that didn’t at least match the federal rate of $7.25.

Wheeler notes in her paper that no minimum wage worker putting in 40 hours a week could afford a two-bedroom apartment that averages a rent of $663 a month in Arkansas.

Minimum-wage employees would instead have to work 63 hours a week to afford that rent, the report claims.