Minimum-wage hike draws mixed feelings; some worry, others relieved at 75 cents more hourly

By: GIG CONAUGHTON - Staff Writer | Tuesday, January 2, 2007 11:03 PM PST ∞

NORTH COUNTY -- California's two-day-old increase to the minimum wage drew mixed reactions Tuesday from economists, job-finders, small-business owners, workers and others in North County.

Some said that the hourly increase of 75 cents that took effect Monday could make illegal immigration worse. Others said it wouldn't really improve the lives of the people it applies to, and still create a ripple effect that could drive up wages in general -- as well as inflating the prices of goods and services.

Still others said it could hurt the state's economy because California's new $7.50 per hour minimum wage would be so much higher than the national rate of $5.15 an hour.

But some people said the minimum-wage increase could help low-wage earners get into housing. And others said the increase would definitely help those trying to live on the low end of the employment scale.

"I think it's definitely a good thing," 19-year-old Sarah O'Nan said from behind the counter at His Place Coffee Shop on Grand Avenue in Escondido. "The minimum-wage laws are meant to protect the people."

California's minimum wage increased Monday from $6.75 an hour to $7.50 an hour on Monday, the first step of a phased, two-year increase. The 75 cent increase represents an 11 percent hike.

The wage is scheduled to increase by 50 cents an hour -- to $8 an hour -- on Jan. 1, 2008, driving the two-year increase to 18.5 percent.

Marney Cox, chief economist at the San Diego Association of Governments, said the increase could hurt the local and state economy in several ways, including by slowly inflating the costs of goods and services. Cox said that prices could rise as wages increase, especially at small businesses, which would simply "pass these (wage) increases on to the consumer to the extent that they can."

Cox said that he did not think the minimum-wage increase would have any noticeable effect on San Diego County's workers, or the state's unemployment rates, because only about 10 percent of the state's 15 million workers were earning the minimum wage.

Still, Cox said that some who earn the minimum wage could find themselves without jobs because of the pressure created by increasing wages "at a time when the local economy and the national economy appear to be slowing down," largely because of demise of a historic housing boom.

And Cox said increasing the minimum wage could worsen San Diego County's illegal immigration problem -- by widening the differences in low-end job pay scales between Mexico and the U.S.

"Where in Mexico can you get these types of raises?" Cox said.

Meanwhile, Phil Blair, co-owner of Manpower of San Diego -- a service that helps people find jobs in the high-level clerical, professional support and engineer and light industrial fields -- said the rise in the minimum wage would have a ripple effect, and drive all wages higher.

"I think what we're going to find is that people that we had at $7.50 an hour before, or $8.50 -- they just took a pay cut," Blair said. "Because before I was 10 percent above (minimum wage) and now I'm not. You're going to see inflation right away."

Martha Thompson, manager at Imagination, a nostalgic pop culture-oriented gift store on Grand Avenue, said her store would not feel the effects of that inflation right away because they had a staff of employees who had been with the store "for years."

But Thompson and other shop owners along Grand Avenue agreed with Blair's assessment that the increase in the minimum wage could force them to give raises to employees who were already earning more than the minimum wage -- but were suddenly making only as much as "people just walking in off the street."

Jessica Leigh, co-owner of LLLReptiles on Grand Avenue, said, "We start (employees) above minimum wage anyway. But obviously it's going to drive wages up in general."

Thompson said the hourly increase of 75 cents could hurt a lot of businesses.

"There are still a lot of industries out there that are barely paying minimum wage," Thompson said. "I mean, 75 cents doesn't sound like a lot. But times that by 40 hours, times so many employees."

Blair, meanwhile, said he doubted that the hourly increase would tangibly improve the life of those earning the minimum wage -- and that the minimum wage should never be confused with a wage that would allow a person to actually live.

With the 75 cent hourly increase, full-time workers earning the minimum wage would make just $15,600 a year before taxes.

"If someone could say to me that this 75 cents raised my level of lifestyle, then I could be a lot more excited about it," Blair said.

But Bob Pinnegar, executive director of the San Diego County Apartment Association, said the increase to the minimum wage could be enough to help some low-wage workers earn enough to qualify to rent apartments.

"Any increase like this -- 75 cents an hour, that's about $1,500 a year -- that could make it easier for them to qualify for that next apartment," he said.

O'Nan, meanwhile, who said she currently earned more than the minimum wage -- but remembered earning that before she came to the coffee shop -- said the 75 cent hourly increase would mean a lot to the people who worked for the minimum.

"It'll make a big difference," she said. "If the minimum wage is supposed to protect the people and keep them fed and clothed -- at just the bare minimum -- it's not succeeding in doing that. Especially in Southern California."

-- Contact staff writer Gig Conaughton at (760) 739-6696 or gconaughton@nctimes.com.