Living on a minimum

Taylor Ferguson

Aireann Smith, geosciences sophomore, has worked for minimum wage her entire life. After working for Save-A-Lot in Corydon as a cashier for six years, she decided to try something new; working at Target under the same pay rate for a year before returning to Save-A-Lot. Four months down the road, Save-A-Lot shut down and left Smith unemployed.

 

Smith has lived with her mother in a two-bedroom apartment for the past nine years. She said her mom takes care of the groceries and most of the rent, but her grandmother has to help them out sometimes when money is low.

“My mom doesn’t work on minimum wage, she gets a little bit more,” Smith said. “But even what she works on is honestly unrealistic to live on.”

Smith said she paid for her car payment, loans, cell phone bill and gas to get to-and-from school before Save-A-Lot shut down. She tried to sign up for unemployment but was ultimately denied.

“That’s all I could get out of a couple paychecks a month,” Smith said. “I’ve been trying to find a job now that I know I got denied. I’ve just been out applying to everywhere.”

The proposed increase by President Obama would raise the minimum wage from $7.25 to $10.10 for all future and renewed federal contracts. A bill that would increase the minimum wage to $10.10 gradually over the next three years cleared in a Kentucky House committee meeting on Jan. 30. However, a different bill – one that would raise the minimum wage a dollar to $8.25 – was introduced to the Indiana House on Jan. 21 and was defeated.

Jerry Conover, director of Indiana Business Research Center, said that the change proposed by President Obama will likely continue to face major opposition in the House, but the president has indicated that he would use an executive order to impose the higher minimum for all future federal contractors.

“Though this would not apply to the workforce in general; only employees with future or renewed federal contracts,” Conover said. “Thus making its impact on the broader economy uncertain.”

Kenny Gerdon, finance senior, said he believes Indiana will be one of the last states to pass an increase.

“Thirteen states raised the wages at the beginning of the year. Not surprisingly, Indiana wasn’t one of them,” Gerdon said.

Gerdon said he felt there are many benefits to raising the federal minimum wage such as increased consumer spending and a boost to the economy.

“One benefit is that the standard of living for those who see an increase in pay will improve,” Gerdon said. “Therefore, expendable income may rise, creating a slight boost in the economy.”

Gerdon said he also believes an increase would aid students who work while going to school without also influencing the cost of tuition.

“Many of us have jobs that we need to pay for tuition, books and so on,” Gerdon said. “I don’t think it will cause an increase in tuition because the majority of faculty members’ pay will not be affected.”

Smith said increasing the minimum wage by any amount would help her with her larger goals in life. She said $7.25 an hour is just not enough.

“I’m 23 and I still live at home,” Smith said. “I need to move out but I can’t do that making minimum wage at a part-time job.”

Increasing the minimum wage is something Smith said she would support. However, she said she also thinks other employees who already make more than the minimum should be compensated as well.

“If someone is already making $10.10 an hour then their pay should go up too,” Smith said. “They’ve already earned that pay rate with what they were able to achieve.”

Smith recalled that when she first started working at Save-A-Lot in high school, minimum wage increased twice in her first two years at the company.

“I guess my employers thought since minimum wage went up for the past two years, then that was supposed to act as my raise,” Smith said. “The problem with that is when they hired someone new that person would in turn be working at the same pay rate as me even though I’d already been there for three years.”

Rhonda Wrzenski, assistant professor of political science, said it all depends on the workers in question and their particular circumstances.

“Are you living at home and working part-time while going to high school or are you trying to support a child and pay rent, utilities, transportation costs, insurance premiums, etc.,” Wrzenski said. “If you fit the latter profile, chances are you will really struggle to support yourself on a minimum wage job paying $7.25 an hour.”

Gerdon said that while there are pros to every situation, there are also cons. For instance, he said there could be widespread job loss as employers cut jobs to afford the employees they decide to keep.

“I know the arguments against the increase but I believe in today’s economy those effects will be minimal,” Gerdon said.

Conover said that research on the subject suggests that a higher minimum wage would not generally increase unemployment, as some have argued.

“In some cases, though, businesses that rely heavily on minimum wage workers and that operate under very small profit margins might have to reduce their work forces,” Conover said. “Thus, the effect on students, many of whom work at minimum wage jobs, could have both positive benefits for those whose employers go along with the hike and negative effects on those whose employers cut back on hours or positions to make ends meet.”

Conover said he has mixed feelings about raising the minimum wage.

“It would provide immediate [support] to workers at the bottom of the wage scale while costing their employers more, possibly leading to reduced employment overall,” Conover said.

Wrzenski said she understands that this could put some pressure on small business owners. However, she said she still believes the economic downturn has impacted a lot of individuals and families negatively.

“An increase in wages for minimum wage workers might give them more long-term financial stability,” Wrzenski said.

Gerdon said he hasn’t worked for minimum wage since he was in high school five years ago.

“It was the same then as it is now,” Gerdon said. “It’s time to raise the wages.”

Conover worked for the minimum wage of $1.60 an hour during his first payroll job in high school.

“I was happy to have the income, but I was also on a path of acquiring skills to rise well above the entry level,” Conover said. “Many people face significant obstacles to following that path.”