WASHINGTON: In a time of rising joblessness across most of Tennessee, an increase in the federal minimum wage today could further send more people into unemployment and even prolong the recession, according to some small-business owners and economists.
"This really puts a crunch on owners," said Phillip Morgan, who employs a half-dozen teens and young adults at his Pizza Done Right restaurant in Joelton. Morgan said a 70-cents-per-hour minimum wage increase that takes effect today means if one of his younger workers leaves to go to college this fall, he won't hire a replacement.
Many of the 89,000 Tennesseans earning minimum wage or less will begin to get $7.25 an hour today, up from $6.55, the last of a three-step increase that began in 2007. That's an extra $28 a week for full-time workers. In Tennessee, only about 6 percent of hourly workers earn minimum wage or less, according to 2008 data from the U.S. Bureau of Labor Statistics.
The increase comes as the unemployment rate edged higher in 84 of Tennessee's 95 counties in June, with 82 counties reporting unemployment of 10 percent or greater, according to a state Department of Labor and Workforce Development report on Thursday.
While advocates say paying higher wages to workers will pump more money into the economy just when a boost is needed, others say the timing during a recession couldn't be worse and could lengthen hard times by forcing small businesses to lay off the same workers whom the pay hike was meant to help when it passed Congress under better economic conditions.
"It's a 10 percent increase, which is huge," said William Dunkelberg, chief economist for the National Federation of Independent Business, a business lobbying organization for small and non-chain businesses. "You don't get raises like that during a recession."
"How will they absorb the increase?" asked Rajeev Dhawan, director of Georgia State University's Economic Forecasting Center. "They will either hire less people or they will do less business."
No comments:
Post a Comment