Large wage hikes could do more harm than good

Published 9:48 pm Sunday, July 2, 2017

A minimum-wage hike percentage in the double digits could mean adverse effects on local businesses, according to Martyn Johnson, Beaufort County Economic Development director.

North Carolina employers by law must follow a minimum wage threshold of $7.25/hour, a number set in 2009 that is equal to the federal rate. After years of inflation, that purchasing power today equates to about $6.55/hour, Johnson said.

“The impact on local businesses of an increase in the minimum wage would be dependent on the scale of the increase. A 9.6% increase would bring the rate back to 2009 standard with maybe little impact,” he wrote in an email. “A larger increase may cause a business to reevaluate their staff needs and wage levels of other employers.”

Legislators in the General Assembly have not expressed any plans to raise minimum wage in the near future, although some argue $7.25/hour is not a livable wage, and it should be raised to as much as $15/hour in some areas.

However, others argue that minimum-wage jobs are typically not the sole job a person holds — making the livable wage argument null and void.

As of 2015, there were 2.4 million workers in North Carolina who earn hourly rates, and 55,000 of those workers earned $7.25/hour, according to the Bureau of Labor Statistics.

More than half of the states have minimum wages higher than the federal level. Almost all of the remaining states, North Carolina included, have a minimum wage at $7.25/hour, according to BLS. Two states have rates lower than $7.25/hour.

“For most businesses, it is the ripple effect that an increase at the bottom of their wage scale has on their overall wage structure that is most concerning,” Johnson wrote. “If an employee at the bottom of a business’s wage structure receives a wage increase, how does the company deal with its other employees? Then, how does an overall wage increase (affect) employment in the business?”

According to Johnson, most minimum wage workers in Beaufort County are younger people with a high school education, and a majority of them work in the food service industry.

Although inflation is a key concern and a wage raise may be warranted, Johnson said a more sustainable way to go about this issue is for residents to pursue further training and educational opportunities, if possible, thus setting a potential employee up for higher pay.

“Rather than worrying about the minimum wage, individuals should aspire to loftier career and life goals,” Johnson said. “By the workforce becoming more skilled, they are able to secure better paying jobs. This will reduce the supply of minimum wage, and assuming demand holds, increase their wage rates.”

Johnson named several opportunities for workers looking to better themselves: Career Readiness Certification, Career and Technical Education courses, Continuing Education classes at Beaufort County Community College and job training through NCWorks, among others.

“For Beaufort County, a more skilled workforce helps the county attract and retain industries and businesses with … better paying jobs,” Johnson said.