How relevant is a $6.15 minimum wage in a city where that amount won’t buy two cups of mocha frappuccino?
As the U.S. House of Representatives was preparing Thursday to approve a $1-an-hour boost in the federal minimum wage over two years, downtown bike messenger Tony Martinez was hurrying through a busy day of deliveries, a commission-based job that pays him $10.50 an hour.
Wage pressure also is showing up in the nation’s executive suites, workforce experts say. White-collar workers have been reneging on promises to jump ship after their current employers had beaten their new deal, said Andrea Redmond, managing director of Russell Reynolds Associates, a Chicago recruiting firm.
As competition for workers has heated up in recent months, labor costs have soared and workers in entry-level jobs are reaping far higher pay than the federal minimum requires, making the proposed minimum-wage hike largely irrelevant.
Still, a boost at the bottom would mean more pay for workers in rural areas. At the lowest skill levels, it usually signals an increase for workers already earning above the minimum.
Congressional opponents of the minimum-wage hike have cited that ripple effect, but it has been a muted battle this time around compared with the fight in 1996. The issue now moves to House-Senate negotiators who will work out differences between the House version and a Senate wage bill, which was passed in February.
A red-hot economy helped curb sentiment against a hike, but businesses also found more to like about the wage package this time around–tax credits and bigger deductions for business meals, for example, said Julia Countryman, government relations director for the Illinois Restaurant Association.
Nine percent of the American labor force, or 10.3 million workers, toil for hourly wages between $5.15 and $6.14, according to the Economic Policy Institute, a research group.
In Illinois, about 462,000 workers are paid in that range, or about 8 percent of the state labor force.
“It’s not trivial, though all wages have been rising so that the group this affects is smaller than the last time around,” said Jared Bernstein of EPI.
A look at federal wage data shows Chicago-area entry-level workers were making well above minimum wage even at the end of 1998, the most recent information available. And anecdotal evidence suggests real wages have come up even more since then.
Data from the Bureau of Labor Statistics show Chicago-area receptionists earning $9.62 an hour, 36 cents higher than the national average. Utility meter readers make $14.10 on average, compared with $12.96 an hour nationwide.
Still, for many Americans, the federal minimum is a real number that will mean more money.
Miriam Chalus, a waitress at the Maple Tree restaurant in Oak Park, said she is happy about the proposed increase, even though her tip income since joining the restaurant about a year ago has been strong.
Not so happy is Maple Tree owner John Mihalos, who called the potential hike “devastating” for a business that prides itself on family meals and low check prices. “If [the minimum wage] increases, it bumps everybody up,” he said.
But on the macro level, the effect of a minimum-wage hike is minimal, said Brian Wesbury, chief economist at Griffin Kubik Stephens & Thompson Inc. in Chicago.
Kenneth Skopec, chief executive of Mid-City Financial Corp. agreed, but added that a hike might induce some workers to take entry-level jobs. “With the summer months coming, it could be an additional incentive, perhaps for teenagers, to come into the labor force,” he said.
Chrissy Albano works about 20 hours a week for $6 an hour at a Walgreens in the southwest suburbs. The 17-year-old high school senior has worked since she turned 16 to help pay for a car, insurance and other bills. Would her fellow students who aren’t working jump into the labor pool if wages rose?
“Maybe,” she said, “If they got paid a lot for doing a little work.”
Haven Cockerham, human resources senior vice president at R.R. Donnelley & Sons Inc. of Chicago, agrees that the labor market is tight. Entry level workers at Donnelley printing facilities, such as one in Elgin, typically earn about $7 an hour, with average rates for the entire plant at $14, he said.
“We don’t see the impact immediately of a minimum-wage hike, but in any environment there is subtle pressure and we can’t ignore this,” Cockerham said. “It’s a great market for those in demand,” he said, citing the most highly skilled–and paid–jobs at the company as being the toughest to fill.
Retailer Sears, Roebuck and Co. is stepping up recruiting efforts. Some stores are increasing their recruiting areas to attract newcomers, a spokeswoman said.
“Hot, hot, hot,” is how headhunter Redmond described the market for executive-level talent today.
Competition for talent is so great that executives are accepting offers and then not showing up for the jobs because their old employers sweetened their offers, Redmond said. “It is indeed a war for talent.”
