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WORLD> America
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Minimum wage going up, little help as costs soar
(Agencies)
Updated: 2008-07-24 09:28 When the minimum rises again next year, catching up with more states, more than 5 million workers will get a raise, said Lisa Lynch, dean of the Heller School for Social Policy and Management at Brandeis University. Some small businesses are already making plans to raise prices to offset the higher wages they have to pay their workers. David Heath, owner of Tiki Tan in College Station, Texas, said the increase will force him to raise prices for his monthly tanning services by about 12 percent. Tiki Tan had been paying its employees US$6 per hour. "There just isn't any room for profit, and so this is why prices will have to go up," he said, citing the wage increase and higher fuel costs. "I have to recoup those costs." The increase in the minimum wage could push food prices even higher by rising the pay for agricultural workers, said Brian Bethune, chief US economist at consulting firm Global Insight. But he said he did not expect the change to have a major impact on the economy because recent increases in productivity, which enables companies to produce more with fewer workers, are keeping labor costs in check. That makes it unlikely the minimum wage increase will trigger a "wage-price spiral," in which workers facing higher costs demand more pay, which in turn causes companies to raise prices higher, sending inflation coursing through the economy. And most businesses, even restaurants and other service sector companies, already pay above the minimum wage anyway. Dan Whitaker, general manager at Anis Bistro in Atlanta, a casual French restaurant, said employees earn at least US$8 an hour. "You can't get a dishwasher for minimum wage," he said. |
