Florida Finds Little Trauma, Drama from Wage Hike Democrats say that raising the federal minimum wage will be a priority when they take control of Congress. Would such a measure help low-wage workers or lead to layoffs? Florida, which raised its minimum wage two years ago, provides some clues.
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Florida Finds Little Trauma, Drama from Wage Hike

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Florida Finds Little Trauma, Drama from Wage Hike

Florida Finds Little Trauma, Drama from Wage Hike

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MICHELE NORRIS, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.

When Democrats take charge of Congress next month, one of the first things they plan to do is raise the minimum wage over several years from $5.15 an hour to $7.25. Businesses often complain that increasing the minimum wage forces them to lay off workers. Some advocates say it means real money for the working poor.

We asked NPR's labor correspondent, Frank Langfitt, to sort out what this will all mean and Frank joins me now in the studio. So glad you're here.

FRANK LANGFITT: Hi, Michele.

NORRIS: How many Americans actually make the minimum wage or less?

LANGFITT: Not that many. You know, less than 3 percent of hourly employees in the country make the minimum wage or less, and there are already 28 states in the country that have laws for a minimum wage higher than the federal standard.

NORRIS: And yet Democrats have made this a top priority. Where did you go to gauge the impact of raising the federal minimum wage to $7.25?

LANGFITT: Well, I wanted to do a little case study so I decided to go to Florida because in 2004 voters there passed an amendment to raise the minimum wage from $5.15 up to, I think it's going to go to $6.67 in January. And there was a lot of heated rhetoric at the time so what I wanted to do was listen to some of the advertisements that people had in 2004 pro and con, and then go back and see well, what actually happened?

NORRIS: Well, let's listen to your piece.

LANGFITT: On both sides, the predictions were dramatic. Here's a television spot against increasing the minimum wage sponsored by the state's restaurant and retailer's association.

Unidentified Announcer #1: We've been through the worst. Four massive hurricanes costing us billions. Now some want to hit Florida again with Number 5 - Amendment 5, a job's killer in a category all its own. Hurting …

LANGFITT: Now here's an ad for raising the minimum wage.

Unidentified Woman: Paula worked full time.

Unidentified Man: Trying to make ends meet and provide for her children.

Unidentified Woman: But like too many hardworking Floridians, her family lived in poverty.

Unidentified Man: Because the minimum wage hasn't been raised in over seven years.

LANGFITT: Voters overwhelming backed the increase, which initially added a dollar to Florida's minimum wage of $5.15.

But try to find someone like the fictional Paula, who says the higher minimum wage has helped a lot. Or a business that's laid off a bunch of workers.

Instead, you're more likely to find business owners who say things like this:

Mr. VICTOR PENARONDA(ph) (Valet Parking Manager, Florida): It doesn't make any difference for us. The minimum wage really has no effect.

Ms. RAJ SHUK(ph) (Bridal Shop Owner, Florida): It's not an issue in my business, no. We pay over the minimum wage.

Mr. HERB KORNBLAU(ph) (Business Owner, Florida): It's irrelevant. It's irrelevant. We never pay people minimum wage. We didn't start paying more when the minimum wage went up because you can't get good help for minimum wage.

That's Victor Penaronda, a valet parking manager, Raj Shuk, who runs a bridal shop and Herb Kornblau, who owns a salad and smoothie joint outside Ft. Lauderdale.

I found Herb through an ad he put on Craigslist. He's struggling to find workers.

Mr. KORNBLAU: I'm specifically looking for sandwich makers and salad makers. We're advertising in the headlines $9 an hour, but we haven't had much of a response at all.

LANGFITT: Really? Why do you think that is?

Mr. KORNBLAU: The unemployment rate's very low. I mean, every place I go people are looking for help.

LANGFITT: Florida's unemployment rate is just 3 percent so the problem for many small businesses isn't a higher minimum wage, but finding good employees who will work for much more. Kornblau doesn't know where he's going to find them.

Mr. KORNBLAU: When the Christmas business comes here, I don't know what I'm going to do because I just don't have the right help or enough help to handle the anticipated rush.

LANGFITT: Of course, expenses have gone up for some business owners because of the minimum wage increase but they haven't laid off lots of workers. Instead, like Chuck Long, they've found other ways to cut costs.

Long runs a Beef O'Brady's, a sports bar for families. The minimum wage increase added $15,000 to his annual payroll, so Long passed on some of the costs to his customers.

Mr. CHUCK LONG (Beef O'Brady's): Certain items where we thought we wouldn't affect the consumer, where they wouldn't really be sticker shocked by it. A lot of our stuff went up 10, 20, 30 cents. Nothing really on our menu ever went up over 30 cents. Our sodas went from $1.69 to $1.79.

LANGFITT: Mike Jacobs found another solution while working at Bahama Breeze, a Caribbean-style chain restaurant. His corporate bosses told him to cut complex menu items to reduce labor costs. Jacobs describes the process as workers renovate his new restaurant.

Mr. MIKE JACOBS (Manager, Bahama Breeze): The Chocolate Tres Leches was one. It was a great desert, but very labor intensive. Making a cake, making a sauce to soak in the cake, letting it sit for 24 hours. Very labor intensive. So that came off the menu.

LANGFITT: So, what of the warnings that the minimum wage would end up:

Unidentified Announcer #2: Hurting thousands of Floridians whose jobs will be outsourced overseas.

LANGFITT: In the last year, Florida has actually added a total of 220,000 jobs and in the hotel and restaurant sector alone, the state gained nearly 30,000 jobs. Restaurant owner Mike Jacobs doesn't think the chains were really worried about layoffs but saying they were sounded a lot better than focusing on what Jacobs calls the real issue.

Mr. JACOBS: Profits. It takes from the bottom line profit, which you know, a corporate restaurant that has to report to their stockholders, you know, profit is a big part of it. So, you know, they weren't 100 percent honest, in my opinion.

LANGFITT: If opponents overstated the threats of a minimum wage increase, advocates may have oversold benefits as well.

Unidentified Announcer #3: Raising the minimum wage by just one dollar will help hundreds of thousands of working Floridians pay for the basic necessities, like food, rent and healthcare.

LANGFITT: In fact, about 150,000 people earned the minimum wage or below. That's less than 2 percent of Florida's workforce and finding some of those people isn't easy. One reason I went to Ft. Lauderdale was because a union, the Service Employees International, said they could put me in touch with janitors who'd benefited from the higher minimum wage but my first interview with a janitor named Maria Vega didn't bode well.

LANGFITT: When the minimum wage changed in Florida in 2005, how much were you making?

Ms. MARIA VEGA (Janitor, Florida): (Speaking foreign language)

LANGFITT: More than $7. In other words, she was making about $2 above the minimum wage at the time it went up.

So we drove down to Miami to the home of Marie Hector, a fellow janitor from Haiti.

LANGFITT: This is Margaret. This is Fred, Marie.

The minimum wage increase added $34 a week to Hector's take-home pay but with her expenses, including $800 a month in rent, she says the raise wasn't nearly enough.

Ms. MARIE HECTOR (Janitor, Florida): (Through Translator) It don't make no difference in my life.

LANGFITT: What would make a difference in your life?

Ms. HECTOR: I need more money.

LANGFITT: How much more?

Ms. HECTOR: Maybe $10, $12. Not $6. Not $7.

LANGFITT: Supporters of increasing the minimum wage often tout the benefits to people like Marie Hector, who's 40 years old and has four children. But a significant number who are at or near the minimum wage are actually teenagers, people like Rachel Lynn. She's 19 and works as a waitress while attending college in Boca Raton.

Like Hector, Lynn says the minimum wage doesn't make a big difference because she relies mostly on tips.

Ms. RACHEL LYNN (Waitress, Florida): You know what? It honestly doesn't matter to me that much as a waitress because I don't see my paycheck as a source of income. It's more bonus money in my pocket.

NORRIS: Thanks for that story, Frank. Now, this is in Florida. What's likely to happen state by state if Congress does raise the federal minimum wage?

LANGFITT: Well it's going to depend, of course, on the economy. You know, we're a nation of many regional economies and in a place like Florida, which of course, it had already passed that was a very robust economy. There's a labor crunch and so wages were high. It didn't affect as many people.

But if you go to other states, particularly those in the Midwest and the Rust Belt, other places where the economy is tougher, wages are lower, it's more likely to really mean something to people and certainly likely to have a bigger impact on a larger percentage of workers.

NORRIS: It's interesting. So few people actually earn the minimum wage. Why is this such a top priority in Washington?

LANGFITT: Well, I think for the Democrats in part it's kind of a moral issue to some degree, $5.15 isn't a lot of money. Especially in this economy, where people have to pay so much for rent let alone try to educate their children.

And I think that they've been trying to do it now - it's been nine years since the minimum wage has been raised. And certainly, when you think of inflation and the other costs that people have to deal with, Democrats really want to change that and they finally now have a chance to do it because they've taken over the House and the Senate.

NORRIS: Thank you, Frank.

LANGFITT: Thank you, Michele.

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