Business, government officials discuss minimum wage hike

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By Kevin Wheatley
The State Journal
For Tommie Jenkins, feeding himself is enough of a struggle. Add a fiancée and four children — two his own — to the equation, and it becomes clear why he’s hunting for more lucrative work.
Jenkins has sought positions in warehouses and through temporary employment services, but nothing has surfaced. The 34-year-old Chicago native has worked for minimum wage — $7.25 an hour — at Wendy’s on Lawrenceburg Road since arriving in Frankfort about a year ago.
He has expanded his job hunt to other nearby cities such as Cincinnati and Indianapolis, even though he likes Frankfort’s appeal as a quiet city to raise his family. “Especially being from a big city like I’m from,” Jenkins said.
But he said he’s found few opportunities to advance his career.
“When I first got here a year ago, I applied at numerous temp services and never got any calls back or anything, so I had to settle for Wendy’s ’cause I can’t just sit on my butt,” he said. “That’s not being a man.”
Jenkins is one of some 60,000 Kentuckians who earn the minimum wage.
The General Assembly is considering a proposal to raise that pay from $7.25 to $10.10 over a three-year period.
The views locally are mixed. Several business owners said a higher minimum wage could lead to higher price tags for their customers. And public officials estimate it could increase payroll nearly $100,000 at the county fire department and more than $34,000 at county schools — or more if other workers push for higher wages in turn.
But for Jenkins, the change would provide financial relief that can’t come soon enough. He estimates he earns roughly $1,000 each month, but his expenses cost about twice as much.
His fiancée signed up for food stamps last week, but Jenkins does not believe he would qualify for similar assistance, such as Medicaid, because his biological children do not live with him.
“I think that (raising the minimum wage to $10.10) would be a big help,” Jenkins said. “It’s a few little dollars, but they add up. I can bring in at least $1,200, or a little over $1,200, a month with that.”
For now, he’s working odd jobs, such as cutting hair and fixing cars, and is studying toward his GED at Thorn Hill Education Center. Jenkins hopes to earn his commercial driver’s license so he can drive a tow truck, and he plans to enroll in college or trade school after finishing work at Thorn Hill.
Raising the state’s minimum wage would have a wide impact, though the details are under speculation.
Opponents of raising the minimum wage say it would cost jobs and induce some inflation while supporters dismiss those claims and say a wage hike would provide an economic windfall since the state’s lowest paid workers would have more disposable income.
Some of those arguments are reflected in a report published this month by the Congressional Budget Office, which estimated an increase in the federal minimum wage to $10.10 would cause the loss of roughly 500,000 jobs nationally while lifting some 900,000 low-income citizens from poverty.

Business reaction
Local business owners interviewed by The State Journal are split on the proposal moving through the Legislature as House Bill 1, which would incrementally increase the minimum wage to $10.10 by 2016 while exempting businesses with less than $500,000 in gross annual sales.
Some fear that rising personnel costs would force them to cut employees’ hours and benefits, reduce staff and/or increase prices.
“None of those are good options, really, to tell you the truth,” said Tod Griffin, spokesman for the Kentucky Retail Federation. “We’re pretty disappointed the bill’s been introduced, and we just don’t think it makes good economic sense.”
Griffin said raising the minimum wage would not have a substantial impact on lifting low-income earners from poverty and suggested implementing an earned income tax credit, as proposed by Gov. Steve Beshear, “might be a good, effective way of helping some folks.” He suggested as labor costs rise and technology becomes less expensive, more businesses will incorporate automated services, such as self-checkout lines at grocery stores.
Others, however, took no issue with a minimum wage hike because their employees already earn more than $7.25 an hour or they can manage higher personnel costs within their budgets.
Jason Bailey, director of the Kentucky Center for Economic Policy, said 1 in 4 Kentucky workers would benefit from raising the minimum wage to $10.10.
“It’s a huge benefit to low-wage workers who have not seen their wages rise in recent years,” Bailey said. “In fact, in real dollars their wages have been declining, and that makes it harder and harder for many families to make ends meet.”
Contrary to stereotypes, Bailey said, many of the beneficiaries of a minimum wage hike would be adults rather than high school students working their first jobs.
“The benefits of the wage increase to the economy and particularly the people impacted far outweigh any potential downside,” he said.
As HB 1 awaits action in the state Senate, some business owners have already begun looking ahead. A similar proposal to raise the federal minimum to $10.10 has been proposed by President Barack Obama and congressional Democrats.
Some, such as Rebecca Ruth Candies owner Charles Booe, remain skeptical. Booe said his youngest and lowest-paid workers support a minimum wage increase while older, higher-paid employees worry that such an increase will trigger inflation.
“I hear that some people think a raise in minimum wage is a backdoor sales tax increase,” Booe said. “As a business owner, I simply have no choice but to pass along any labor cost into the price of my products.”
Others are not as uneasy. Ann Wingrove, owner of Completely Kentucky, said although her business would be exempt under the parameters of HB 1, she would still raise her employees’ pay to match the proposed $10.10 if the legislation passes.
Danny Bryant, owner of Bryant’s Pic-Pac, said HB 1 would not affect his grocery much because only a couple of his 23 employees earn an hourly wage less than $9.50.
The “wage creep” effect — where those making more than $10.10 an hour currently request higher pay — could raise some problems, Bryant said, but he does not expect his “little operation” to be greatly impacted by that either.
“The thing about me is I’ve got so many people that’s been here 10-plus years, and that’s kind of why it won’t have a lot of effect on myself,” Bryant said. “I probably got two people who haven’t been here 10-plus years.”

Effects on governments
Local governments, too, would see an effect if HB 1 passes. The Legislative Research Commission estimated municipal governments collectively would pay $5 million per year more in wages once the bill is enacted, while school districts would see payrolls rise $4.8 million.
Franklin County Treasurer Susan Laurenson said the proposed wage increase would have a “significant impact” on the county’s fire department, which bases its pay scale on hourly work. If HB 1 passes, Franklin County Fiscal Court could consider making the fire department its own taxing district, she said.
“I’ve been rather vocal that we need a funding source for our countywide fire department other than the general fund,” Laurenson said. “But we have so many limitations as a county on our funding mechanisms. We don’t have the freedom that the city has to increase the payroll tax rate among a group of people who don’t even live and vote here.”
Based on the eight low-paid firefighter positions she observed, a minimum wage increase would add nearly $100,000 to the department’s personnel costs.
County firefighters start out earning $8.42 hourly, which includes overtime pay, and can earn $10.36 per hour after three years of service with the proper certifications, Franklin County Fire Chief Kevin Hutcherson said.
“It would most definitely push the lower end much closer to the next rank up as far as closing the pay gap,” Hutcherson said.
When asked whether the fire department might reconsider its pay scale if the minimum wage is increased, Hutcherson said, “That’s definitely something that we would have to look at.”
A wage increase would impact the city’s 330 seasonal and part-time workers in the Frankfort Parks, Recreation and Historic Sites Department, E-911 and Frankfort Transit System, Frankfort Finance Director Steve Dawson said.