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Minimum wage debate has local supporters, detractors

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Jim Leute
February 22, 2014

JANESVILLE--Local restaurateur Scott Acker is a strong believer in the free market.

As such, Acker doesn't believe a nearly 40 percent increase in the minimum wage fits the model.

There's once again a groundswell for an increase in the minimum wage, which hasn't increased since 2009.

The federal minimum wage is $7.25, the same as Wisconsin's.

States can establish their own minimum wages, and when the federal and state rates are different, workers must be paid the higher rate.

President Barack Obama said in his recent State of the Union address that he would raise the minimum wage to $10.10 for government contract workers.

Democrats in Wisconsin unveiled a bill in January that would immediately raise the state's minimum wage to $8.20 and incrementally increase it to $10.10 within two years of the bill's passage.

“Recent polls make it clear that a majority of Americans … support an increase in the minimum wage,” Rep. Cory Mason, D-Racine, said in announcing the legislation. “The public recognizes that even if you work full time at or close to the minimum wage, you simply cannot makes ends meet.”

“Wisconsin's working families deserve a raise.”

The bill got the early support of 34 state representatives and 12 state senators, all of them Democrats.

It does not, however, have the support of Acker, who opened Quaker Steak & Lube in Janesville last year.

“What I don't think people are taking into perspective is that not every single job has to be a living-wage job,” said Acker, who also owns Quaker Steak restaurants in Middleton and New Berlin.

“This idea that you can just step out of high school and into a living-wage job. … I don't know. I struggle with that because I just don't think it's realistic.”

In 2012, about 14.9 percent of Rock County's workforce was earning an average hourly wage of less than $10.10, according to the U.S. Bureau of Labor Statistics. Nearly 54 percent of them were working in the food service industry.

Most proposals to increase the minimum wage target employees who don't earn tips. The state proposal, however, would raise the minimum wage for tipped employees from $2.33 to $3 per hour.

Acker said his tipped employees earn about $15 per hour. Because of the vagaries of tips, they might average $25 an hour one day and $8 an hour the next.

Acker's non-tipped employees make between $8 and $11 per hour.

“My cooks in Middleton earn a little more, but that's because it's harder to find cooks up there,” he said. “That's a function of the free market.”

While Acker's non-tipped employees now earn more than the minimum wage, any mandated increase would shift his entire pay scale up.

Entry-level employees at $10.10 would force Acker to pay his experienced employees more, he said.

“Any increase would bump up the entire wage scale by two or three bucks, and the cost of your hamburger would probably go up a buck or two,” he said.

He'd also have to deal with price hikes that come from wage increases at his suppliers, he said.

Acker said he keeps coming back to what he believes is a wrong-headed notion that every job must support a living.

“Does the 16-year-old bagger at the grocery store or the kid who is handing food out my drive-through window really need to be paid $15 an hour at this point in their life?” Acker said. “Maybe the entry-level jobs should instead be something that gets someone in the door and gives them the opportunity to get experience, better themselves and move up to higher wage jobs.”

PARTISAN VIEWS

Last month, Gov. Scott Walker reiterated his opposition to raising the minimum wage in remarks to the Wisconsin Grocers Association.

He said it would lead to employers hiring fewer teenage workers or force them to give smaller raises to more experienced workers.

“It is a job-killing agenda,” he said. “It's done for political expediency. It's a cheap headline.”

Democratic gubernatorial candidate Mary Burke said she supports the increase and that “the research shows in states that have raised the minimum wage above the federal wage that it has absolutely no impact on unemployment rates.”

Among local legislators, the Democrats are in favor of a minimum wage increase and the Republicans are opposed.

Democratic Reps. Deb Kolste of Janesville, Andy Jorgensen of Milton and Janis Ringhand of Evansville all have signed on in support of the state legislation. So, too, has Sen. Tim Cullen, D-Janesville.

“It's sad that we've got people living in poverty who are working full time, getting food stamps and medical assistance, especially at a time when corporate profits are at an all-time high,” Kolste said.

Kolste said the main argument against the increase is that it's a job killer because employers faced with a higher wage scale will not hire new employees.

Kolste said the evidence doesn't support that. Nineteen other states and the District of Columbia have wages higher than the federal minimum wage, and they haven't lost jobs solely because of the increase, she said.

“The governor wants to give back $50 or $100 in the form of property tax relief because he thinks that will stimulate the economy,” Kolste said. “I think more money on paychecks will really stimulate the economy.”

Kolste said she's a realist, and given the GOP control of both houses and the governor's office, the state is unlikely to increase its minimum wage anytime soon.

“The truth is that it will be hard to even get a hearing on the bill,” she said.

She denied accusations from the other side of the aisle that the effort is a political stunt to generate votes in an election year.

“More people are in favor of raising the minimum wage than are opposed,” she said. “We know that our minimum wage has not kept up when indexed for inflation.

“If people truly believe that it's OK to have people who work full time live in poverty while corporate profits are at an all time high and those corporations' employees are forced to live on subsidies, then I think they need to rethink that.”

Rep. Amy Loudenbeck, R-Clinton, said she would not sign on to the bill, but she is following the issue and is interested in what her constituents have to say.

“From a workforce development standpoint and what we're trying to accomplish in the Legislature, we're really focusing on the skills gap and matching people to jobs that are available,” she said. “We're focused on giving people the soft skills they need to enter the workforce and fill positions we have and get people back to work.

“That will remain a priority--getting people back to work.”

WHO IS AFFECTED?

Much of the minimum wage debate will center on who would be affected by an increase.

Just who is making the minimum wage? Neither side seems to agree on the makeup of those on the bottom end of the earning scale.

Mason and the Democrats pushing the state bill say it's a misconception that most workers earning the minimum wage are teenagers. They cite federal and state data that indicates 82 percent of the people in Wisconsin who would benefit from the increase are at least 20 years old.

The nonpartisan Congressional Budget Office reported Tuesday that raising the minimum wage to $10.10 an hour could lift 900,000 Americans out of poverty but also cost a half-million jobs.

The 43-page report by the Congressional Budget Office found that the proposal would increase earnings overall by $31 billion, although only 19 percent would go to families below the poverty line. That's because many people who work low-income jobs come from families that collectively make far more than the poverty threshold, the CBO said.

The plan would move nearly a million people above the poverty line, the CBO report found, with 16.5 million workers seeing hourly wages rise.

The CBO estimated, though, that the plan would reduce total employment by about 500,000 workers once fully implemented in 2016.

In December, the nonpartisan Pew Research Center reported that more than half of the 3.55 million U.S. workers who were at or below the federal minimum in 2012 were ages 16 to 24. Another 20.3 percent were ages 25 to 34.

In Acker's case, many of his employees are younger people in first jobs or working while attending school. Some employees, he added, are working for him and other employers in an effort to make ends meet.

Acker said his small business is not one of those corporations raking in record profits.

“Our margins are already so thin,” he said. “I get a 5 percent royalty haircut right off the top, so then if you raise the minimum wage, you take a 3 percent to 5 percent profit margin and cut it down to 1 percent or 2 percent.

“That's really tough, and at some point the consumer is not going to pay $13 for a hamburger.”



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