For more information
Posters and other complianceassistance materials concerning the minimum wage increase are available free at the U.S. Labor Department's Wage and Hour Division and can be obtained at www.dol.gov/esa/whd.
Niki Grant greets a customer with a smile as she reaches deep inside a cooler of pastel-colored cold treats to scoop up a mango-flavored refreshment on a steamy afternoon.
At 16, the flavored-ice server is working her first job, at Rita's Italian ice shop in Ladson.
The Summerville resident doesn't have a car and relies on her mother to ferry her back and forth to work.
Unlike most teenagers who spend what they make on mall trips, movies and merry-making, Grant saves her wages and what few tips she splits with eight co-workers. The rising junior at Cane Bay High School wants a car and yearns to go to college to become a psychologist.
Grant knows she will have to save a lot.
She is one of about 6,000 people — mostly janitors, teenagers in fast-food jobs or unskilled laborers — in South Carolina who earn minimum wage, according to the U.S. Bureau of Labor Statistics.
On Friday, she and the others will earn a little more. The federal minimum wage rises to $7.25 an hour from $6.55, the third consecutive year the minimum wage has gone up 70 cents each year. It's the final installment approved by Congress in 2007, before the deep recession began.
While the boost in minimum wage is welcomed by those on the low-end of the pay scale, it doesn't amount to a lot.
It totals $28 a week for a person working 40 hours, about enough for a small tank of gas. With the pay hike, a worker's paycheck will total $290 a week before taxes or $15,080 a year. It seems paltry by today's living standards, but it's still above the 2009 poverty line of $10,830 for one person in the 48 contiguous U.S. states, according to the U.S. Department of Health and Human Services.
Raising the minimum wage won't do much for workers, but it could have an inverse effect on employers, said College of Charleston economist Frank Hefner.
Raising the minimum wage is more harmful than beneficial, he said.
"Anytime you raise the minimum wage, you are going to create unemployment," Hefner said. "It drives other salaries up. Driving up salaries in the middle of a recession is not a good idea."
He noted that President Franklin D. Roosevelt tried it in the 1930s.
"It drove the unemployment rate higher," Hefner said.
By raising the minimum wage, employers also have to pay extra in federal taxes and workmen's compensation, he said.
"What if by raising the minimum wage, a person doesn't get hired?" Hefner said. "It's ambiguous as to how many people will lose their jobs. The theory tells us some will. ... It's feel-good legislation. They think it's a good idea. If it's such a good idea, why don't they raise it to $50,000?"
The effects of raising the minimum wage won't show up for some time, but with the national jobless rate approaching 10 percent and the state's unemployment level even higher, Hefner said there could be a negative effect in months to come, though it's hard to judge how much the rates will be affected by the wage hike.
"It's certainly not a good thing in a recession," he said.
A local chamber of commerce official agrees.
"We oppose setting a federal or state minimum wage," said Mary Graham, senior vice president of public policy at Charleston Metro Chamber of Commerce. "We feel they are both unnecessary. It's just another mandated cost to business."
The chamber prefers competition in the free market to drive pay scales and wants to improve the standard of living by growing jobs that pay higher wages.
"Another increase to business is just another burden right now as they struggle to keep the jobs they have," Graham said. "It's another cost they will be absorbing when they are struggling to survive."
Studies show that when there is an increase in the minimum wage, businesses have to cut back somewhere else, possibly leaving positions unfilled because they can't take on additional costs, she said.
"They may choose not to offer summer employment or don't take on paid internships or apprenticeships," Graham said.
The higher wages could trickle down to customers through higher prices for goods, possibly leading to inflation, she added.
"Now is certainly a bad time for it to happen," Graham said.
Less than one-half of one percent of South Carolina workers earn minimum wage. Of the 298,000 workers in the Lowcountry as of May, less than 1,500 fall into that category, Graham noted.
Another 60,000 workers around the state make less than the minimum wage, she said. Those are mainly waiters and waitresses and personal care workers who rely on tips to even out their minimum wage earnings.
Wait staff earn $2.13 an hour, but their combined hourly wage and tips must add up to more than the new minimum wage.
Rita's owner, Karl Wacker, doesn't like wait staff's low minimum wage.
"If people are stingy, they don't make very much," he said.
Wacker also doesn't see the wage hike affecting the business he started four months ago. His business plan won't change as he plans to keep the same number of workers.
"I think the raise in the minimum wage is a good thing," Wacker said. "It's time. They have to do something for the increase in the cost of living."
Grant's co-worker, Chandler Limehouse, also 16, welcomes the extra money, no matter how little it is.
"I think it's good," the Ladson resident said. "People are struggling, and it gives me more money."
Who benefits from the minimum wage hike? Fast-food cooks, janitors and other low-paid workers could get a boost in their paychecks when the federal minimum wage increases 70 cents to $7.25 an hour on July 24. Here are some details:
Why is the minimum wage going up? Congress passed a minimum wage law in 2007 to increase the rate incrementally over three years. This is the last increase.
What was the rate before this law passed? The minimum wage was $5.15 from 1997 to July 2007.
How many people will be affected? In South Carolina, 6,000 workers earned the minimum wage in 2008, according to the U.S. Bureau of Labor Statistics. That is less than 1 percent of the state's work force.
How will the increase affect restaurant servers who get a small wage plus tips? The minimum wage for wait staff will remain $2.13 per hour. However, their combined hourly wage and tips must add up to more than $7.25 per hour.
Will other workers benefit? Government jobs and some private-sector jobs are paid wages based on a scale that weighs experience, education and other qualifications. Some of those pay scales are based on minimum wage, so when it increases, everyone in the ranks gets a bump.
What impact will this have on employers? Not much, according to those who watch small-business issues. Most businesses pay more than the minimum wage to attract and keep good employees, said Frank Knapp, president of the S.C. Small Business Chamber of Commerce. However, it could hurt some small businesses that already are struggling through the recession, said Kevin Skipper, a financial adviser in Columbia.
The federal minimum wage started out at a quarter in 1938 and eased its way up to $3.10 by 1980. Since then, the pay rate has been:--$3.35 as of Jan. 1 1985.--$3.80, April 1, 1990.--$4.25, April 1, 1991.--$4.75, Oct. 1, 1996.--$5.15, Sept. 1, 1997.--$5.85, July 24, 2007.--$6.55, July 24, 2008.--$7.25, July 24, 2009.
Chandler Limehouse, who works at Rita's Italian Ice shop in Ladson, will be getting a raise as minimum wage goes up to $7.25 per hour on Friday×
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