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Weighing financial impact of minimum wage hike on employers in area

Sun Advocate reporter

Numerous employees in the Carbon County area punch time clocks. Effective July 24, the minimum hourly wage increased from $5.15 to $5.85.

On July 24, a federal mandate from the United States Department of Labor's wage and hourly division required all employers to raise minimum hourly pay from $5.15 to $5.85.

The increase comes as part of the three-step initiative that will raise the minimum wage to $7.25 by July 2009.

According to the labor department, the wage increases' prime objective is to allow individuals to have a more significant amount of independence based upon a minimum wage salary.

While the wage increase will affect local employees somewhat, it will not have significant repercussions for Carbon County employers, according to economic development director Delynn Fielding.

"With a very low unemployment rate and high wage pressures, a large portion of local employers are paying a significant amount above the minimum wage just to retain their workforce," commented Fielding.

Although the increase may not have serious effects on local employers, recent economic data indicate that, while most county businesses are paying more than the minimum wage, the companies are still falling short of many national averages.

Data results published by the Castle Country business expansion and retention project stipulate that reported wage levels are less than state and national averages for skilled, semi-skilled and entry level employees.

However, the wages are perceived by local employers as equal to or greater than the businesses' national counterparts.

"This may lead to additional problems with recruitment and retention in tightening labor market," said Fielding.

Additionally, 275 of the 392 companies interviewed by the BEAR project as of June reported they provided no benefits to employees as of last month.

It is estimated that, nationally, the minimum wage increase will affect 13 million workers at locations across the United States.

According to the national economic policy institute, the earnings of minimum wage workers are crucial to the financial well-being of the individuals' families.

Evidence from an analysis of the 1996-1997 minimum wage increase determined that the average minimum wage worker brought home more than one-half of his or her family's weekly earnings.

An estimated 1,229,000 single parents with children younger than 18 years of age would benefit from a minimum wage increase to $7.75 by 2009.

Women represent the largest group of beneficiaries from a minimum wage increase, according to officials. About 59 percent of U.S. workers who would benefit from an increase are women. An estimated 12 percent of working women would benefit directly from an increase.

The policy institute further reported that a disproportionate share of minorities would benefit from a minimum wage increase.

African Americans represent 11 percent of the total workforce, but comprise 16 percent of employees affected by an increase.

Similarly, 14 percent of the total workforce is Hispanic. But Hispanics will be 19 percent of workers affected by an increase.

In conclusion, the data provided little evidence that the increase will have no negative effect on employment rates. The minimum wage hike was necessary due to the fact inflation has all but eliminated the benefit of the last increase.

New economic models looking specifically at low-wage labor markets help explain why there is little evidence of job loss associated with minimum wage increases.

The models recognize that employers may be able to absorb some of the expense associated with a wage increase through higher productivity, lower recruiting-training costs, decreased absenteeism and increased worker morale.

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