Akron-area employers move ahead on wage increases as bid to raise federal minimum stalls
Count Ashlea Hyde among the Akron Children’s Hospital employees who got a larger paycheck when the hospital in late 2019 boosted its minimum pay rate to $15 an hour.
Hyde currently works part-time as a medical secretary in the hospital’s offices in downtown Warren. And, in about six months, she will finish studies, also paid for by the hospital, to become a better-paid medical assistant.
“I went from $13.75 to $15 when they increased it,” said Hyde, who is 36 and lives with her husband and their daughter in the Cortland area. “It helped with the simple things, economy wise, with the gas going up” plus paying for groceries and setting aside money for vacation, she said.
“You can see the increase,” she said.
It also provided a psychological and confidence boost, Hyde said. “It shows you are appreciated and they are trying to help you,” she said.
Hyde is among numerous people in the Greater Akron area whose employers now pay a minimum of $15 an hour or higher. Those raises are happening even as measures in Washington have stalled to more than double the current federal minimum wage to $15 an hour.
The ‘Amazon effect’: Businesses raise wages after Amazon pay increase
Part of those private pay raises appear likely because of the so-called “Amazon effect.”
Online retail giant Amazon is paying $15 an hour plus benefits at its fulfillment centers nationwide. That includes the more than 1,500 people now working at Amazon’s mammoth fulfillment center off Romig Road in Akron that opened last fall.
That in turn pressures other businesses to raise their pay and make other changes to avoid losing employees to Amazon.
It’s not just Akron Children’s or other local hospitals that have boosted minimum wages.
Huntington Bank now pays its employees at least $17 a hour, in part as a response to higher pay elsewhere and also because of its own corporate values. Hobby Lobby also now pays full-time employees at least $17 an hour. Signet Jewelers most recently announced it will increase its base wage to $15 an hour by next year. Target starts employees at $15 an hour. WalMart just announced it will be boosting wages as well, with many, but not all, getting starting pay of at least $15 an hour.
The online Living Wage Calculator by the Massachusetts Institute of Technology estimates the “living wage” for an adult with no children in Summit County is $10.70 an hour; That amount increases to $13.10 an hour in Akron. An adult with one child would have a living wage at $23.31 an hour in the county and $29.02 in Akron, the site shows.
Long-stalled federal standard
All of this is happening while Congress has been debating whether and how to raise the federal minimum wage over the next several years to $15 an hour. The current federal rate, $7.25 an hour, has been unchanged since 2009. (And is lower than the 2021 Ohio minimum wage of $8.80 an hour.) The federal minimum wage has not kept up with inflation and a person making minimum wage cannot afford basic necessities for themselves or a family, wage increase proponents say.
Democrats tried but failed to include a $15/hour phased-in wage provision in the $1.9 trillion COVID relief bill that was signed into law this week. The proposal called for the minimum wage to rise to $9.50 an hour in June, and increase in June every year afterward until it hit $15 an hour in 2025. Starting in June 2026 the minimum wage then would be adjusted annually for inflation.
“Amazon coming to town has definitely created a response,” said Sue Lacy, head of job connecting organization Conxus NEO.
As larger employers have increased pay scales, smaller employers have also responded, she said.
Besides wage increases, local businesses are also “rolling up their sleeves” to advance the skills of their employees as well, she said. Employers are realizing they have an opportunity to strengthen their ability to attract and retain employees and grow their own talent, she said.
Not everyone is on board with wage increases
Critics of a higher mandated federal minimum say it would hurt people and businesses even as it boosted the wages of others. Proponents say people need to be paid more to meet even basic expenses.
The Buckeye Institute in a report released a week ago estimated a $15-an-hour federal minimum wage would lead to the loss of almost 116,000 jobs in Ohio by 2025, including the loss of nearly 5,500 jobs in Summit County. Their analysis shows a mandated wage increase creates winners and losers, the organization said.
“The better policy is to leave minimum wage decisions to the state to ensure that local economies can grow, create more jobs, and hire more workers,” said Logan Kolas, an analyst in the institute’s Economic Research Center.
Policy Matters Ohio, meanwhile, said in an employment analysis that too many jobs in Ohio don’t pay enough for a typical worker to feed a family of three without getting government assistance.
Private sector wage increases make sense over a government mandate, said Keith Lake, vice president of government affairs for the Ohio Chamber of Commerce.
“We think that’s the free market at work. We think that’s great,” Lake said. “We think the mistake comes when the government decides everybody should pay $15 an hour. … A mandated governmental minimum wage is a one-size fits all solution.”
That’s because different businesses and industries have different cost structures, Lake said.
The $15 an hour rate is often said to be a wage that can support a family, Lake said.
“A lot of folks at minimum wage aren’t trying to support a family,” he said. A lot of minimum wage earners are like his 17-year-old daughter who works two jobs, he said.
If businesses have to increase what they pay, will they continue to employ his daughter, Lake asked. Businesses may decide that while they will pay more, they will also have fewer employees, he said.
Incremental plans
While the federal government continues to debate, eight states — California, Florida, Connecticut, Illinois, Maryland, Massachusetts, New Jersey, and Virginia — plan to increase their state minimum wages to $15 an hour by 2026, according to the Peter G. Peterson Foundation.
Not many workers make the current federal minimum wage of $7.25 an hour, according to the U.S. Bureau of Labor Statistics. About 1% of workers ages 25 and older were at the minimum wage in 2019; of all hourly workers, about 3% of women and 1% of men had wages at or below the federal minimum wage, according to the bureau.
Workers under age 25 made up 40% of federal minimum wage earners.
Still, the nonpartisan Congressional Budget Office estimates that 17 million workers would have their pay increased to $15 an hour should the current plan to raise the federal minimum wage be enacted. An additional 10 million people now earning $15 an hour or slightly higher would also get their pay raised, according to the CBO analysis. Democrats in Congress have been looking to raise the rate in increments to $15 an hour by 2025.
While large businesses in and around Akron have been increasing their pay, local small business owners are wondering about how that will impact their hiring. And they wonder what they will have to do if the federal government eventually raises the national minimum wage.
Local perspectives
Ed Sutter, owner of Eddie’s Famous Cheesesteaks &Grille on South Main Street in downtown Akron and a long-time caterer and casual food business operator, says increasing the federal minimum wage should be looked at.
Sutter says he already pays his employees “well above” the minimum wage, and that his employees also get tips. But he said he’s not sure all small businesses, including those fast-serve and casual restaurants, will be able to absorb the higher labor costs.
“You’ll have to look at your pricing,” Sutter said.
A $15 an hour minimum wage will make it difficult to offer incentives to employees, Sutter said.
“How can I incent someone to give a good job and get a raise?” he said. “I don’t think a job at fast food should be looked at $15 an hour.”
Derek Fromby, who owns an Akron construction company and is co-owner of The Beanhead Brothers coffee shop, said he thinks any business needs to think about raising its minimum pay.
“I’m all for $15 an hour,” he said.
But the ongoing COVID-19 pandemic is a problem, he said. “It’s a little bit rough right now,” Fromby said. “We’re still doing OK.”
Ron Shea, who owns R. Shea Brewery, with restaurant and brewery operations in downtown Akron and in Merriman Valley, said his tipped employees, who make up about two-thirds of his staff, already make at least $20 an hour. Non-tipped employees are close to $15 an hour, he said.
“They work hard,” he said.
It doesn’t make sense to raise the minimum wage during the COVID-19 pandemic, Shea said.
“The timing is horrible,” he said. For the time being, he and others are limited in the number of customers allowed to drink and dine in their facilities.
“A lot of restaurants are mom and pop restaurants,” Shea said. They didn’t start their operations with a $15 an hour wage business model, he said.
As a result of the pandemic, Shea said he’s been running his business “so lean”.
Every business he knows is working to find ways to operate with fewer people because of the pandemic, he said. “We’re turning over every rock to be leaner,” he said.
Shea also said he is finding it hard to hire people for openings because the higher state unemployment payments tied to the pandemic make it easier for people to stay at home instead of getting a job. When the higher payments end at some point, Shea said he expects to see people scrambling to find work.
“We’re constantly hiring,” Shea said. “We just can’t fill the positions.”
Jim Mackinnon covers business. He can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com. Follow him @JimMackinnonABJ on Twitter or www.facebook.com/JimMackinnonABJ.
Exploring the pros and cons of minimum wage increases
The debate over raising the federal minimum wages includes looking at who wins and who loses under a higher cost government mandate.
The nonpartisan Congressional Budget Office in February reported the Raise the Wage Act of 2021 would cause significant job loss while lifting nearly a million people out of poverty. It also would lead to an increase in the cost of goods and services.
That study parallels a CBO study done in 2019 on a similar proposal to raise the federal minimum wage to $15 an hour. In that study, the report, using different measuring means, estimated lifting 1.3 million people out of poverty and the loss of 1.3 million jobs.
Pros
• 900,000 people lifted out of poverty.
• 17 million workers, or about 10% of the U.S. labor force, get wage increases to at least $15 an hour.
• 10 million additional workers making $15 an hour or slightly above would get raises.
• Workers get an additional $509 billion in pay from 2021 to 2031. (Cumulative pay totals are $333 billion after subtracting for job losses over that period.)
• Federal government revenues increase
Cons
• 1.4 million jobs lost. Young, less educated people would disproportionately lose jobs.
• Business labor costs rise.
• Lower employment means loss of $175 billion in pay from 2021 to 2031. (Cumulative pay totals are $333 billion after adding $509 billion in higher pay over that period.)
• Medicaid spending would increase because of job losses.
• Higher labor costs are passed on to customers via higher prices for goods and services.
Read original release here.
Mackinnon, Jim. (2021, March 14) Akron-area employers move ahead on wage increases as bid to raise federal minimum stalls. Akron Beacon Journal. Retrieved from https://www.beaconjournal.com/story/news/2021/03/14/akron-area-private-companies-boosting-minimum-wages-15-and-more/6755046002/