Monday, June 05, 2000

Minimum wage jobs draw fewer workers

Tight market loosens change at lower tier

By James Pilcher
The Cincinnati Enquirer

        It's hard to buy two large cappuccino coffees at Starbucks with the hourly minimum wage — much less make a living on $5.15 an hour. Thanks to the lowest unemployment rates in decades, fewer Tristate workers have to.

        They're earning much more than minimum wage, as employers such as Starbucks, Frisch's Restaurants and others compete for appli cants who can find higher-paying jobs.

        “When I went out looking for a job, there wasn't a single place I applied that was starting at minimum wage,” said Steve Sefchick, 22, a shift supervisor at the coffee conglomerate's downtown Cincinnati store at Fourth and Vine. “You just can't survive on it.”

        Nationally, only 4.6 percent of hourly workers made the federal minimum wage or less last year. That figure is down from 5.1 percent in 1997 and 13.4 percent in 1979 when the minimum wage was $2.90 an hour.

        In Ohio, 6.0 percent of hourly workers made the minimum wage or less last year, down from 6.6 percent in 1998. Kentucky and Indiana have seen similar drops.

        Mark Schweitzer, a labor economist for the U.S. Federal Reserve, said the minimum wage still prevails in a few places, especially in rural or remote areas.

        But Mr. Schweitzer says metropolitan areas such as Cincinnati are part of the national trend that sees hourly wages that approach or exceed double digits.

        “Can you quote laughter?” said Craig Maier, president and chief executive officer of Frisch's Restaurants, when asked whether his company paid

        any employees the minimum wage. “You can't hire anybody at minimum wage anymore. It doesn't apply.

        “And to make $10 an hour at one of our stores isn't unusual any more.”

A decent living?
        The minimum wage was instituted throughout the United States in 1938 as a way to guarantee the working class a decent standard of living.

        But the hourly minimum wage increased only from $2.90 in 1979 to $3.80 in 1990. Over the same time, the percentage of hourly workers who earned minimum wage dropped from 13.4 percent to 5.1 percent.

        The minimum wage was designed to represent about half the value of the national average wage, according to Nancy Bertaux, a Xavier University economics and human resources professor.

        But in the 1980s, big business and profit-minded Wall Street conspired to defeat that goal, she said.

        This year, the minimum wage represents less than 40 percent of the average hourly pay of all workers. “What you are seeing,” Dr. Bertaux said, “is economic factors forcing another de facto minimum wage that is about the $7 an hour that you see in the windows of fast-food restaurants.”

        Dr. Bertaux adds that companies having to pay low-skill workers upwards of $10 an hour are actually getting off cheaply.

        “Even the current average wage is surprisingly low with all the economic growth going on,” she said. “If you look at other historical periods of productivity like this one, you would see the gap between wages and earnings and profits to be a lot smaller than they are now.

        “It's just that this group of people at this level are more powerless than they used to be.”

New approaches
        Terry Jaspers, who owns two McDonald's restaurants in the West Chester area, has found it increasingly hard to attract reliable teen workers because many have become telemarketers.

        “A lot of these telemarketers, who would never have looked at teen-agers before, are offering $8 and up per hour, plus a comfortable chair and air conditioning,” said Ms. Jaspers, who starts employees at $6-$7 an hour.

        Her franchise offers college tuition incentives to teens who will work at least 10 hours a week. For each hour a student works, Ms. Jaspers places $1 in a special account.

        “They've got to stay with me,” she said. “After working the summer following their senior year, I write a check to their university when they enroll. Say they've worked 1,000 hours by then. That's $1,000 toward their education. Their parents like it, and we keep better employees.“

        According to Steve Koons, adjustment services manager for Ohio Valley Goodwill, today's labor market presents a far different picture from that of just two years ago. In 1998, he said, more of Goodwill's trainees had to settle for minimum wage.

        The tight labor market also means more opportunities for people with disabilities, Mr. Koons said.

        “What I'm seeing is a lot more willingness from employers to think of creative ways to handle labor needs and to get the job done,“ he said.

        Mr. Sefchick, the Starbucks supervisor and a Clifton native, says his beginning wage at the coffee store was $6.50 an hour seven months ago. Since then, he's received a promotion and accompanying raise and has qualified for full medical benefits, a 401(k) savings plan and stock options.

        “I could definitely make more income than I do now in another line of work,” said Mr. Sefchick, who would not divulge his exact wage. “But Starbucks isn't doing wrong by me with how much they give me per hour. We're both making out OK.”

        Cliff Peale and Jennifer Callison contributed to this report.


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