Minimum wage raise for lowest paid

Jeff Tyler Jan 2, 2012

Kai Ryssdal: The end of the year is typically bonus-time for a lot of people who work in corporate America. By contrast, some of the working poor get their small bumps at the beginning.

Eight states increased their minimum wages yesterday to keep pace with inflation. Depending on where you live, the increase was between 28 and 37 cents. But as Marketplace’s Jeff Tyler reports, that small change can have a big impact.

Jeff Tyler: Four years ago, Kelly Wiedemer didn’t count her pennies. With a job in financial services, she didn’t need to.

Kelly Wiedemer:  My base salary was 67.5, plus bonus. So I was right at the $70,000 mark.

Then she lost her job. In her mid-40s, Wiedemer couldn’t find a comparable position in her industry. After years with no work, she took a job as a gas station cashier for minimum wage.

Wiedemer: I’m now the working poor. I’m now among the working poor for the first time in my life.

She lives in Colorado, one of eight states that increased the minimum wage to match inflation.

Wiedemer:  The increase helps to offset the rising costs of food at the grocery store. Effectively, without that increase it would be just a lot like having a pay cut, frankly. Because that same dollar won’t go as far at the grocery store.

In Colorado, the raise is a modest 28 cents. But it’s worth considering that, in the last year, Wiedemer has had do without things like toothpaste or shampoo. Saving pennies for the essentials.

Wiedemer:  Even more important is – food for my dogs. So, everyone one of those pennies and those dollars add up to help pay for those things that I use to take for granted.

The recession has forced more Americans into low-wage jobs, where the pay has been shrinking.

Paul Sonn: During the recession, the median wage in low-wage occupations fell 2.3 percent.

That’s Paul Sonn with the National Employment Law Project. He says boosting the minimum-wage helps counter the impact of flat or falling wages.

Sonn: That’s not only hard for working families at the bottom, but it’s terrible for our economy.

He says the economy benefits when poor people get a raise because they typically spend that money immediately. For Kelly Wiedemer, that raise also helps offset another trend in low-wage industries.

Wiedemer:  My hours are going to be cut. They’ve informed me that my hours will be reduced here starting probably next week.

Happy New Year, Kelly.

I’m Jeff Tyler for Marketplace.

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