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Minimum wage change: A blip or a bombshell?

Published Aug. 28, 2005

Supporters and opponents of a higher minimum wage squared off Wednesday with dueling news conferences and drastically different forecasts of what an extra dollar an hour might mean.

"Small Florida-based businesses will be forced to raise their prices or drastically cut services to customers," predicted the Coalition to Save Florida's Jobs. "Many will undoubtedly be put out of business."

Not according to Floridians for All, the group on the other side. Its report showed businesses could cover the extra pay with very modest price increases - a penny on a retailer's $20 sweatshirt or 14 cents on a restaurant's $20 meal. At the same time, retailers serving low-income areas could expect sales to increase along with their customers' income.

Both sides are directing their messages at Florida voters, who will decide in November whether to approve a constitutional amendment setting a state minimum wage of $6.15 an hour, adjusted annually thereafter for inflation.

If it passes, about 300,000 workers are expected to get a raise when it goes into effect six months later. According to the proponents, another 555,000 workers who make a little more than the new minimum also are likely to benefit. Opponents claim the ripple effect will go much higher up the wage scale.

"Whether they're making $10, $12, $14, they are going to look for a dollar increase," predicted Bob Kirscher of the Broken Egg Restaurant on Siesta Key.

A particularly sore point for him is that tipped employees' minimum base pay will increase from $2.13 to $3.13 an hour. He said that means raises for servers who are already making $35,000 to $50,000 a year with tips.

The opponents, led by the Florida Retail Federation and the Florida Restaurant Association, two industries that employ lots of lower-wage workers, predict "tens of thousands" of jobs will be lost. They said 65 percent of 700 employers who responded to an e-mail survey said they would hire fewer workers or outsource jobs if the amendment passes. Forty-eight percent said they would raise prices and 38 percent said they would cut employee benefits.

"The money has to come from somewhere," said Rick McAllister, president of the retail federation. He said low-wage workers will be hurt because there won't be as many entry-level jobs.

McAllister and Carol Dover, president of the restaurant association, said this is a particularly hard time for their members, who have faced higher gasoline costs, hurricanes and a subsequent falloff in tourism.

"You couldn't pick a worse time in the hospitality industry to hit us with a dollar increase," Dover said.

However, McAllister said he would be opposed to an increase in the minimum wage at any time. Market forces should decide pay, he said.

Proponents say the minimum wage needs to go up because it has lost so much ground to inflation, losing nearly 40 percent of its buying power since 1968. Their campaign is backed by labor unions and the reform group ACORN.

To back their point of view, the proponents have a new study prepared by the Political Economy Research Institute at the University of Massachusetts, Amherst and the Center for American Progress.

"Raising the minimum wage will give 850,000 workers what they have earned caring for your children, cooking your meals and doing your laundry and performing thousands of jobs that have made Florida a better place to live," said John Podesta, the center's founder and former President Bill Clinton's chief of staff.

The cost to the state's private businesses is expected to be $406-million, which the study says could be covered by sales growth of 1/25th of 1 percent.

Both sides agree that there will be a negative impact on some workers. Higher family incomes would make about 13,000 children ineligible to continue receiving subsidized health care through the KidCare program. Others would lose Medicaid coverage but become eligible for KidCare.

Opponents say the minimum wage would put Florida at a competitive disadvantage in wooing new businesses to the state. Florida would be the only state in the Southeast with a state minimum wage higher than the federal minimum. When the two conflict, the higher number applies.

However, proponents say the concerns are overblown.

"Price increases will wash out; Florida businesses won't lose revenue, customers or profits," said Robert Pollin, co-director of the Political Economy Research Institute.

Times Staff writer Lucy Morgan contributed to this report. Helen Huntley can be reached at or (727) 893-8230.