Minimum wage hike could increase joblessness

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A hike in the state minimum wage may sound good to some but for many working entry-level jobs, it could mean layoffs are right around the corner.

According to state records, about 650,000 workers benefited from the minimum wage increase that took affect July 1. Minimum wage rose to $7.75 an hour from $7.50 an hour. The minimum wage will go up again to $8 July 2009 and finally to $8.25 July 2010. Still some Blacks working in blue-collar industries such as hospitality, industrial and retail, fear they could lose their jobs. “I have worked at the Hyatt Hotel doing housekeeping for six years thanks to a job-training program at the unemployment office,” said Edward Johnson, 39. “I make $10.50 an hour after previously making $9. But my job can get someone younger like a teenager who is willing to accept minimum wage. Then I am out of a job.” Monica Calhoun, 46, owns a North Side Dollar Store and has four, part-time teenagers and one full-time adult employee who is the assistant manager. “It may be cheaper to make my assistant manager part-time or eliminate the position all together,” said Calhoun. “I know everybody needs their job, but something has to give in order for me to comply with the wage increase.” Dwayne McBride, 43, is an assistant manager for produce at a Chicago grocery store. He has worked there for 15 years and said the minimum wage hike won’t affect him directly because he is a salaried employee. “But it will affect my co-workers, especially those who are part-time,” he said. “We have a lot of teenagers and college students working at our store, and I know they depend on their jobs but if cuts have to be made, it will probably start with the youngsters.” Small, Black business owners say the minimum wage increase affects their bottom line and could, ultimately, result in job losses. “The economy has everybody pinching pennies, especially small businesses, so any mandated pay increase will have to be made up by reducing expenses such as payroll,” said Byron Williams, 54, founder and president of Williams Construction Co. in south suburban Harvey. The company has 10 employees. According to a recent report by the Economic Policy Institute and Voices for Illinois Children, two non-profit organizations, 80 percent of minimum wage workers in Illinois are working adults. Gov. Rod Blagojevich first boosted Illinois’ minimum wage to $5.50 an hour in 2004 and $6.50 an hour in 2005. Prior to those state increases, minimum wage earners made $5.15 an hour, which was the previous federal minimum wage. The current federal minimum is $5.85 an hour. Economists say that raising the minimum wage to $7.75 an hour will generate an additional $520 in annual wages for a full-time minimum wage worker, boosting the average minimum wage earner’s annual pay to $16,120. The top five states with the highest minimum wages are Washington, $8.07; California and Massachusetts, $8; Oregon, $7.95; and Illinois $7.50.

Wendell Hutson can be reached via e-mail at whutson@chicagodefender.com.

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