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Small hike in Florida's minimum wage reignites labor debate

The latest increase in the federal minimum wage today is easy for Floridians to downplay.

After all, in a state where the mandated minimum wage is already $7.21 an hour, it only means a four-cent-an-hour rise (compared to 70 cents an hour in other states directly tied to the federal minimum). And by some estimates, it affects only about 155,000 people here, or less than 1 percent of the state's 18-million-plus residents.

But the jump is enough to reignite a passionate labor debate dating back to the Great Depression: does a minimum wage boost the economy by putting more money in people's pockets to spend or does it hurt the economy by forcing small businesses to raise prices and cut staff?

With the country mired in the longest recession since World War II, the question is far from academic.

Many economists, a breed keenly focused on job creation, say a recession is a bad time to raise minimum wages and put more pressure on employers. Then again, researchers with Florida International University's Research Institute for Social and Economic Policy analyzed Florida's new minimum wage law a year after it took effect and found no downward affect on employment.

Both camps are out in full force, providing plenty of ammunition to make their respective case:

•About 75 percent of minimum wage workers are over 20 years old and about half are full-time workers, according to the Economic Policy Institute, countering the perception that most minimum wage workers are teenagers working part-time jobs.

•The Employment Policies Institute said last summer's 12 percent minimum wage hike nationally contributed to rising teen unemployment. The institute also cites a 2007 survey from the American Economic Association at the University of New Hampshire that said 73 percent of labor economists think increases in the minimum wage will lead to employment losses falling disproportionately on the least skilled workers.

•Labor Secretary Hilda Solis says this week's minimum wage increase will generate an extra $5.5 billion in consumer spending over the next year.

•A 2008 survey of small and midsize businesses nationwide by the National Small Business Association found most small businesses already exceeded federal minimums. Only 17 percent of small businesses employing fewer than 500 employees pay less than $10 per hour on average, the survey found.

Jeff Harrington can be reached at jharrington@sptimes.com or (727)893-8242.

Small hike in Florida's minimum wage reignites labor debate 07/23/09 [Last modified: Thursday, July 23, 2009 9:07pm]
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