Minimum Wage is at a Crisis Level 

The people Patrick Graham sees at Crisis Assistance Ministry come to the agency when they're at their lowest. An illness, a job loss, a cutback in hours at work or an unexpectedly high heating bill are a few of the problems that leave them struggling to keep the lights on and the grocery bills paid.

During their month of crisis, these clients' income averages $887 -- only $5 less than what they'd earn working full-time at the federal minimum hourly rate of $5.15, Graham said.

Such stark numbers are behind a push to increase North Carolina's minimum wage to $6 an hour. If the move is successful, the state would join Arkansas and Florida in bucking the South's historic unfriendliness to minimum wage increases. And more than 100,000 NC workers could get bigger paychecks.

The North Carolina Senate is currently considering the proposal, which passed the House in August by a narrow 62-57 vote. The proposal has the backing of several high-ranking Democrats, including Gov. Mike Easley, who factored an 85-cent-per-hour increase into his budget proposal released May 9.

"We have a moral obligation as a state to try to improve the quality of life for citizens," said Rep. Alma Adams, D-Guilford, who has sponsored legislation to raise the minimum wage every session of the General Assembly since voters elected her in 1994.

Though public support for the wage increase is growing, its passage isn't assured, as a debate between labor and business continues. The big question is: Do minimum wage increases help workers or hurt the very businesses that are supposed to hire them?

The Fair Labor Standards Act established a federal minimum wage in 1938. Nationally, the minimum wage hasn't changed since 1997 and, according to the liberal advocacy group Working Families Win, the earnings buy less today than the minimum of $4.25 did in 1995.

Absent federal action, 21 states and the District of Columbia have moved to increase their minimum wage rates higher than $5.15. Several such actions came only recently, as Arkansas' did last month. A few states don't have minimum wage laws on the books at all but still must comply with the federal requirement. Guess where they're concentrated? If you guessed the South, you're right.

In several states, the liberal advocacy group ACORN (Association of Community Organizations for Reform Now) has been instrumental in getting wage increases passed. ACORN is one of several advocacy groups that have formed the North Carolinians for Fair Wages organization to agitate for change here. Meghan Foulke, legislative and political director for ACORN NC, said the minimum wage is a fairness issue. "People who work and work hard shouldn't be poor," Foulke said.

A person who works full time for the minimum wage now makes $10,712 a year before taxes -- the 2006 federal poverty guideline for a two-person family is $13,200 a year. An 85-cent increase to $6 an hour would bump an income to $12,120 a year before taxes -- a godsend to low-wage workers but hardly a ticket to easy street. "This is just a small drop in the bucket," said Lynice Williams, executive director of NC Fair Share. "I don't think businesses are going to suffer. If anything, this is going to pour more money into the economy. Because if people have more, they will spend more."

Said MaryBe McMillan, secretary-treasurer of the NC AFL-CIO: "That's why you hear the CEO of Wal-mart advocating a wage increase." The retailer supported a recent minimum wage increase in its home state of Arkansas, but some observers there noted wage increases would more likely put pressure on small businesses -- a potential advantage for Wal-mart, the retail behemoth critics say drives independent shops to shutdown.

David Mills, executive director of the Common Sense Foundation, said wage increases actually spur business growth. "Study after study have shown that the wage increases increase employee loyalty and also increase the amount of money that consumers have to spend on the economy," he said. Also, he believes an increase might help undocumented workers. "I would think a minimum wage increase would help decrease whatever dependence they have on society for help," he said.

But critics say these advocates couldn't be more wrong.

Business groups are campaigning to quash the measure. They contend increasing the cost of hiring employees will discourage business owners from hiring the people most in need of acquiring job skills. And a survey of economists at top universities found that two-thirds agree or partly agree that "a minimum wage increases unemployment among [the] young and unskilled," according to the Journal of Economic Perspectives.

Peter Arcidiacono, an assistant professor of economics at Duke University, said his research suggests minimum wage increases push poor people out of the job market as wealthy teenagers seek jobs. In North Carolina, 38 percent of people earning the minimum wage live with a parent or relative, according to US Census Bureau data analyzed by the Economic Policy Institute, a think tank backed partly by business groups. Only 14 percent are single parents.

"People who are participating in the labor market from low-income families are likely to participate in the market regardless of what the wage was, whereas higher wages have a bigger inducement effect on people from more advantaged backgrounds," Arcidiacono said. "It's not necessarily a preference for one worker or another, but ... if a position's already been filled by the time you apply, then you're sort of out of luck," Arcidiacono said.

Arcidiacono believes a minimum wage increase would encourage illegal immigration. "I think it provides a big incentive to use alternative labor sources, so the incentive to hire illegal immigrants, sort of on the side, certainly goes up," he said.

But the public seems to favor raising the minimum wage. A poll by the Elon University Institute for Politics and Public Affairs found that more than 75 percent of people questioned agreed or strongly agreed that the minimum wage in North Carolina should be increased.

Public Policy Polling released in February its findings that 80 percent of adults surveyed support an increase. And the Civitas Institute, a conservative public policy think tank, found that 85 percent of people questioned support raising the minimum wage by one dollar.

Even if it's raised a dollar, low-paid workers without question will still struggle. Sharon Glenn, a Hurricane Katrina evacuee with two children, said she couldn't imagine how she'd get by on $5.15 an hour.

With the $6.50 she earns as a convenience store clerk, she struggles to get her bills paid and care for her two children living with her. Sending for a third child, who was sent to stay with relatives during Katrina's chaos, is out of the question.

"It's hard to stand on your feet all day," said Glenn, 28. "And once you do get paid, all that's gone."