Minimum-wage increase 'practically nothing,' some say

Florida rang in the new year with a raise for low-paid workers.

But the payoff might not be big in Southwest Florida.

On Jan. 1, the state's minimum wage increased by 12 cents to $7.79 an hour.

However, only a small number of the 7.5 million people employed in Florida make the lowest wage. It's the same story in Southwest Florida."In Naples, Fla., minimum wage is a fiction, unless you are hiring young kids. Nobody is going to work for less than $8 an hour," said Ross Edlund, owner/president of Skillets.

Skillets, whose motto is "breakfast and lunch with flair," continues its expansion in Southwest Florida and will open a fourth restaurant in North Naples on Jan. 10. Hiring won't be slowed by the minimum wage hike, Edlund said.

"It's really a minor increase this year," he said. "It's practically nothing."

All of his workers, including starting dishwashers, make at least $10 an hour, he said.

"You can't get good help for that kind of money," Edlund said of Florida's minimum wage.

A 2004 constitutional amendment requires Florida's minimum wage to be recalculated every year. The adjustment is tied to inflation.

Florida was among 10 states that increased their minimum wage this year. In this state, the raise went to an estimated 210,000 workers. How many of those workers are in Lee and Collier counties was not immediately available at press time.

Mike Adams, a local McDonald's owner/operator, characterized this year's hike as modest, compared to some other years when the minimum wage has spiked by 25 to 30 cents. He expects little impact.

"I would say businesses got off pretty lucky this year," he said. "We are continuing to hire to meet the needs of our business. We are still growing our business."

A few weeks ago, he and his partner, owners of Adams & O'Reilly Inc., opened another McDonald's at Six Mile Cypress Parkway and U.S. 41, in south Fort Myers. They have more than 20 stores in the region.

"We're stepping up on our other restaurants to prepare for the season," Adams said. "Our stores are doing pretty well. Pretty busy."

In general, there's a debate about how much a minimum-wage increase affects hiring. Some think it does.

"If they allowed the companies to pay less, they would probably hire more," said Gary Jackson, director of the Regional Economic Research Institute at Florida Gulf Coast University in Estero.

"It's a tough situation from an economist's perspective," he said. "In certain markets, there may be some justification. But in general it tends to create a government floor, instead of letting the market decide what the pay should be for the people."

A better alternative might be to give low-income workers an income tax credit if the goal is to create higher incomes, Jackson said.

"Workers are better off if they are able to keep their jobs," he said. "But there will be less workers hired, so the ones that aren't hired are going to be worse off."

In October, the Employment Policies Institute in Washington, D.C., blasted the increase in Florida's minimum wage, saying it would lead to a drop in job opportunities for the least skilled. A recent study by the institute found that raising it further to $9.80 — as House and Senate Democrats have proposed — would eliminate nearly 36,000 Florida jobs.

"Florida's policy of annually increasing the state minimum wage is supposed to help the lowest-paid employees," said Michael Saltsman, a research fellow for the institute, in a statement.

"But the state's teens who would work at the minimum don't need a raise — they need a job. Unfortunately, minimum wage hikes only hurt these job seekers by reducing overall job opportunities."

Nationally, workers under 25 make up a fifth of all hourly paid workers, but almost half of them earn the minimum wage, he said in a phone interview Wednesday.

Restaurants, retailers and grocery stores, many of which hire teens, are among the hardest hit when states increase their bottom wage because profits often run thin at these businesses, Saltsman said. The employment rate for 16- to 19-year-olds has been above 20 percent for four years, he pointed out.

"Businesses are trying to find ways to do more with less," he said. "So if you're a grocery story maybe that means moving to self-checkout technology, which allows customers to check themselves out. If you are a full-service restaurant maybe that means servers bus their own tables, instead of having busboys."

With this year's hike, minimum wage workers in Florida are expected to earn about $370 more a year.

The increases in other states this year range from 10 to 15 cents an hour. About 1 million workers are getting bigger paychecks in the 10 states that raised their minimum wage, said David Cooper, an analyst with the Economic Policy Institute in Washington, D.C., in a recent blog post.

"For a low-wage worker, these increases are a vital protection against rising costs," he said. "In states without indexing, inflation slowly erodes the value of minimum wage workers' pay."

At $7.25 an hour, the federal minimum wage, Cooper said, has already lost about 7 percent of its value since it was last raised in July 2009. In 1968, at its high point, it was equal to about $9.85 an hour in today's dollars — about 36 percent more than it is now.

"As workers' purchasing power declines due to inflation, they're not able to buy the same volume of goods and services they previously could," he wrote.

"Not only is this dangerous for workers earning the bare minimum, but it lowers economic activity and costs jobs."

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