Minimum Wage Hike Spurs Optimism And Debate Millions of America's low-wage workers are about to get a raise. But economists are debating how the pay hike will play out. Some worry that forcing higher wages will hurt small businesses. Others say raising the minimum wage will generate more consumer spending.
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Minimum Wage Hike Spurs Optimism And Debate

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Minimum Wage Hike Spurs Optimism And Debate

Minimum Wage Hike Spurs Optimism And Debate

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Tomorrow, millions of America's low-wage workers get a raise. The federal minimum wage jumps from $6.55 an hour to $7.25. Congress approved that raise a couple of years ago. Now, some economists worry that higher wages will hurt small business in a recession. Eileen Appelbaum says the raise will help working families.

EILEEN APPELBAUM: The minimum wage has always and ever and still today is a working woman's issue. Two-thirds of minimum wage workers today are women.

INSKEEP: Appelbaum is a Rutgers University economist.

APPELBAUM: Life is just one crisis after another, and we have children growing up in poverty. There's no other industrialized country with the kinds of poverty the children face in this country.

INSKEEP: And that is where NPR's David Greene begins, with a child and his mom in New Orleans.

EDWARD CLARK: (Singing) (unintelligible)

JAMIE CLARK: Please say your name.


DAVID GREENE: I want you to meet 24-year-old Jamie Clark and her son Edward. They live in a crowded house with five other family members outside New Orleans. Clark is the face of the low-wage worker. She spends her days, many nights, at a downtown restaurant.

CLARK: Yeah, I'm a server. I do - you know, wait on tables. We also - it's a small restaurant, so we, like, bus our own tables. We sort of do a little bit of everything.

GREENE: It might not seem like much. But up until now, Edward has been getting his clothing, his toys from neighbors once their kids are done with them.

CLARK: That's what I'm thinking about in my head.


CLARK: I'm like, oh, $7.25? Now I can buy this. And it's just really embarrassing not to be able to provide just those simple things.

GREENE: She says now she might get Edward one of the Transformer toys he's been begging for.

CLARK: Being able to buy a toy for my son, that puts money back in the economy.

GREENE: Money back in the economy. What Clark said right there is actually the subject of a lot of debate right now. Many of these economists like Eileen Appelbaum at Rutgers believe Jamie Clark is right. If low-wage workers like her have a bit more money to spend, that's good for the economy in a recession. On the other hand...

RICHARD BURKHAUSER: This is absolutely the worst time to raise the minimum wage.

GREENE: Many economists, like Richard Burkhauser from Cornell University, worry that increasing the minimum wage will put such a strain on small businesses, they might have to cut some of their low wage jobs.

BURKHAUSER: It's hard to tell a story that something that everybody thinks helps people doesn't.


ALAN JACKSON: (Singing) It's five o'clock somewhere.

GREENE: I'm in the Sportland Arcade with Sashi Nawaratnasamy. She's a college student from Sri Lanka working here. You know those machines where you control a crane and you try to pick up a prize? Well, Sashi's job is to take care of them.

SASHI NAWARATNSAMY: Cute teddy bears here.


GREENE: So is there a secret to this? I mean, I've never been able to make that crane pick anything up.

NAWARATNSAMY: No. I have no idea about that.

GREENE: Sashi wants to make $3,000 this summer to take back to college in Minnesota. Tomorrow, her wage goes up from $7 to $7.25 an hour. Sure, it's only 15 bucks more a week.

GREENE: But can a quarter an hour help? I mean, will that be...

NAWARATNSAMY: Yeah, obviously, yeah.

GREENE: Do you think you'll spend it going out to dinner an extra time over the summer, or you'll hold onto it for college?

NAWARATNSAMY: No, I will hold onto my college, because that's why I came here.

GREENE: But Sashi's bosses are worried about paying out higher wages in such a bad tourism year.

STEPHANIE HIPPLER: Last year was 10 times busier in Ocean City, and we're just trying to tough it out. And hopefully August brings in the good money.


GREENE: This is Stephanie Hippler. She and the other managers at the arcade say this year has been so tight, they've already cut eight summer employees. I'm speaking here to Hippler and also Robyn Phillips, the general manager.

HIPPLER: Bad timing, definitely, I would say, for us to have to up our payroll.

GREENE: And so what do you think - how will you handle it? I mean, you might have to cut back on hours and...

ROBYN PHILLIPS: You cut back on hours, and you give - instead of two days off, you get three days off. So you cut as much as you can.

GREENE: And just how businesses like this respond to the minimum wage hike is something economists are watching. I'll talk more about this on our program ALL THINGS CONSIDERED later today. I'm David Greene, NPR News.

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