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What $5 more an hour could buy a low-wage worker

McDonald's french fries sit under a heat lamp during a one-day hiring event at a McDonald's restaurant on April 19, 2011 in San Francisco, Calif.

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In the last few weeks, workers at big chains like Walmart and McDonald's have walked off their jobs, demanding a raise.  The average pay for workers at those places is often not much above minimum wage, and many employees say they don’t earn enough to make ends meet.

But there are a few exceptions to the low-wage service industry rule. So when you talk to workers who make more than the industry standard, what does a few more bucks an hour really mean? 

Those few more bucks an hour mean a few thousand more bucks a year, of course.

That might not sound like a lot, but that extra money can be a sort of tipping point for lots of other things, according to Johnny Smith. He’s a 32 year old with a snidely whiplash mustache who worked for many years at Trader Joe's in Los Angeles. Smith takes me to his old store, to point out just a few of the chain reactions higher pay set off in his life. 

First, we go to the parking lot, which is, as usual, a mess. Angry drivers honk and jostle their way into the store, on the hunt for holiday party appetizers. “It gets pretty brutal,” Smith says, laughing.  He’s seen fist fights break out. He rolls his eyes. “I mean, come on, you're buying produce.”

But in the middle of all that customer angst, Smith says the people working inside, behind the counter stay pretty happy. And the reason why, Smith says, mostly goes back to higher pay.  The average wage for a cashier in the U.S. is around $10 an hour. At Trader Joe's, it's more like $15.

“Obviously if you're making that much more money an hour, you want to hold on to that,” Smith says. 

Aside from being happier at work, Smith says there were more concrete changes to his life. He worked a minimum wage job before he started at Trader Joe's, and says once he was making a little more, he was able to afford gasoline. His diet went from fast food dollar menus, to fresh food, now and then. “I thought I hit the jack pot,” he says.  

Even just slightly higher wages bring small but significant differences, says  Robert Pollin, an economist at the University of Massachusetts who has interviewed dozens of workers who got raises from low to so-called "living" wages.

He asked workers what changed, and they mentioned things like paying off credit card debt, or taking a class to develop a new skill. “It's not like it helped people to dramatically get ahead,” Pollin says.  “But it enabled them to stop falling behind.”

John Castro is a cook who, until recently, made $12 an hour. He says even that was tough in an expensive city like Los Angeles.  He’s single, with no children. “That's the only reason I was barely getting by with low wages,” he says.

Then Castro got a job as a line cook in a unionized hotel in downtown L.A., and started making $17 an hour.

He says one of the best side effects of higher wages has been in an unlikely place: his love life. “It's easier to date,” he laughs. Not just because he can afford to take someone out to dinner now. But because he feels better about himself, which makes it easier to ask a person out.  

About the author

Krissy Clark is the senior reporter for Marketplace’s Wealth & Poverty Desk.
umbrelladaisy's picture
umbrelladaisy - Dec 17, 2012

As a former Paramedic, I agree with the pp mastrbruce, I used to make $10/hr as an EMT only 3 years ago in Texas and the wage has not gone up. Paramedics got paid $13/hr and that is ridiculous for the work they have to do. This only means if a fast food worker is getting paid more than a higher skilled worker in order to live, then higher skilled, underpaid workers also need a raise. Wages are always the last to go up when inflation and prices increase. Everyone deserves a living wage. Unionization should be more prevalent. In a country where corporations are given "personhood status", real people need all the leverage they can get to improve their lives, no one else will do it for them.

BusyPoorDad's picture
BusyPoorDad - Dec 11, 2012

I'm sorry, but $15 an hour is more than what Paramedics make at Cleveland Ambulance companies. And they save lives.

A low wage worker is low wage because they are not producing enough to be a high wage worker. All workers have to produce more value/money than they cost the company in wages, taxes, and other state fees. There is no way a high school grad hired to flip burgers and clean the rest room is going to be "worth" the same pay as a Paramedic with over 18 months of training and clinical experience.

And no, the solution is not "well pay everyone $5 more an hour". All that will do is raise prices putting the low wage worker back where they are now if they are lucky.

mastrbruce's picture
mastrbruce - Dec 12, 2012

Then the obvious answer is for Paramedics to make more -- not for fast food workers to make less. And no, that won't raise prices for everyone. The idea of tying "worth" to the kind of work you do seems odd to me. What the fast food worker produces is customer service which does have a value. To just write off "high school grads" seems strange to me.

WestCoast's picture
WestCoast - Dec 16, 2012

mastrbruce said "And no, that won't raise prices for everyone."

From the author's other article:

In a big city, the living wage for a single person is about $12 an hour. About $4 more than Jonathan Smith, the movie theater worker, was making at his job. Of course, that extra money would've been nice for Jonathan.

But don’t forget: “that money has to come from somewhere,” says Robert Pollin, an economist at University of Massachusetts. And the most likely place for that money to come from, Pollin says, is price increases.

“Essentially what we're talking about with a price increase is a transfer of money to low wage workers, from people who are consumers.”

http://www.marketplace.org/topics/wealth-poverty/how-raising-low-wages-r...

wendybuell's picture
wendybuell - Dec 12, 2012

So your solution to paramedics being poorly paid is to demand that everyone get paid badly rather than demand higher wages? Your notion that people flipping burgers are worth less is probably incorrect based on wealth produced and why shouldn't those who contribute to making "some" people wealthy earn enough to feed their own family? Does what you do make you a more valuable person? Are you more upset at the idea of fast food/retail workers making a decent salary than you are at the idea of the heads of large businesses making millions? What is the criteria for being worthy enough to be able to afford to keep a roof over your head, the power on and food in your belly?

mastrbruce's picture
mastrbruce - Dec 12, 2012

Quite true on all counts.