Should Georgia Raise the Minimum Wage?

It looks like raising the minimum wage is going to be a hot topic in 2014. Across the country, Democrats are signaling that they hope to use the issue to take the spotlight away from the troubled rollout of the Affordable Care Act. Therefore, it’s really no surprise that a bill to raise Georgia’s minimum wage is ready to be filed for the 2014 session. From the Douglas County Sentinel:

District 35 Sen. Donzella James (D-Atlanta), who represents a majority of Douglas County, said she’s already drawn up the bill to introduce on Day 1 that would raise Georgia’s minimum wage from its current $5.15 per hour to something higher.

James said the only section not filled out in the bill is the amount. She said while she would like to see it raised to $10 an hour, she’s been talking to people in the business community and knows $10 probably isn’t realistic.

While it’s true that Georgia’s minimum wage is $5.15 per hour, in reality, most workers are paid at least the federal minimum of $7.25 per hour.

Who gets paid the minimum wage? Typically entry-level workers at fast food chains like McDonalds. As the owner-operator of several McDonalds restaurants in the Columbus area, John Pezold is very familiar with minimum wage workers and trying to earn a profit in what is a very low margin business. After President Obama gave a speech promoting an increase in the minimum wage earlier this month, Pezold posted the following picture on Facebook:
John Pezold on the minimum wage

Pezold’s point was that if you raise the cost of labor above the value it brings to a business, business owners will find a cheaper substitute, even if it means eliminating jobs.

Oh, and did I mention that Pezold is the gentleman representing House District 133 under the Gold Dome? It will be interesting to see how far Sen. James’ bill gets in the legislature this year.


  1. Many who advocate for the increase don’t really understand who is paid the minimum wage. 50% of minimum wage earners are 16-25…the average family income they have…$65,900 a year. This is a wage earned by young middle class kids. Those who are over 25, average household income $42,500. That number is skewed down because of those 62 and up who work, but want to keep their income down so as not to affect their Social Security benefits.

    And the important thing here…only 2.9% of American workers earn the minimum wage. That’s right 2.9%.

    People aren’t in poverty because the minimum wage, they are in poverty because they have no job at all.

    • Dave Bearse says:

      The national percentage of workers paid the minimum wage is indeed low. Presumably, but enlighten me otherwise, the 3% you cite is based on the federal minimum wage. I’d guess on the order of half of workers are employed in states that have minimum wages that are higher than the federal level. The average in states with state minimum wage laws that are less than the federal level could be double.

      About a quarter or workers are low wage workers (<$12 / hr) earning minimum wage or only a few dollars an hour more than minimum wage. Many of those would receive higher wages as a result of a higher minimum wage.

      As to the legislation, it'll be lucky to receive a Committee hearing.

      • Many of those may receive higher wages. But in that same light, shouldn’t we all get a raise if minimum wage increases? Isn’t it all relative? So if everyones wages go up, and prices go up as a result, where does that leave us?

        • benevolus says:

          So let’s see, if we were employing prisoners for free but now we must pay them, all our wages should go up?

          Not that I am opposed to that, but I don’t think it follows.

          • seenbetrdayz says:

            If you raise the wage of a McDonalds worker with no education to $10/hr then he’ll be on the same pay scale as a patient care technician in a hospital who had to attend classes at a vocational school to be certified to work for . . . about $10/hr. So, actually, it *does* follow that you’ll have to raise the pay of the patient care tech to incentivize them to not just skip getting a degree and settle for working at McDonalds as a cashier which requires no formal training or investment. Of course, if you raise the pay of a patient care tech to $14 an hour, now you’ve just put them on the pay scale of an LPN who had to go to technical school to obtain a degree in licensed practical nursing. It therefore follows that you’ll have to raise the pay of the LPN. Raise the pay of the LPN and you’ll have to raise the pay of the RNs. Raise the pay of the RNs and you’ll have to raise the pay of department managers. Etcetera, etc.

            At some point, that McDonalds cashier starts talking about how $10/hr isn’t enough, now that everyone’s got raises and he’s having to deal with increased costs of goods and services.

            Rinse. Repeat.

        • Dave Bearse says:

          Wage increases will vary inversely with the difference between current wages and the new minimum wage. I’d guess the increase for those that are currently paid at least twice as much as any new minimum wage will not be significant.

          Price increases will be concentrated in the leisure and hospitality services. The magnitude of the effect of price increases on an individual is related to total and the fraction of leisure and hospitality services.

          • It’s not just leisure and hospitality services. Think auto manufacturers and unions as just one example. (Unless you consider the auto industry part of hospitality or leisure.) Take any other industry with a union as an example. See:

            “The labor contracts that we examined used a variety of methods to trigger the increases. The two most popular formulas were setting baseline union wages as a percentage above the state or federal minimum wage or mandating a flat wage premium above the minimum wage.”


            • Dave Bearse says:

              The “two most popular formulas” doesn’t provide much information about the number relative to total formulas. (The story after a couple of sentences is behind a paywall.)

              There may be a large number of such formulas covering a small number of workers. (My limited experience with large labor organizations [UAW, railroads] is over 14 years old. I don’t recollect wages being linked to minimum wage.)

              Union now represent only 11% of workers, so the relative number of so-affected workers is small.

    • Dave Bearse says:

      50% of minimum wage earners are 16-25 is incorrect—only about 20% of minimum wage earners are 24 years old or less.

      A more appropriate statistic is that 5.4% of workers earn the minimum wage or less than minimum wage.

  2. bullFrog says:

    The most logical action is to eliminate the minimum wage altogether. But if you’re going to be arbitrary, why not make it $100/hr?

  3. John Pezold says:

    I was surprised when I read yesterday that Georgia’s minimum wage was $5.15. We’ve been starting our people out at $7.25 for years. Indeed, this is only a starting point and many get raises quite quickly, based on performance.

  4. Jackster says:

    If a minimum wage debate were to ensue, wouldn’t we also need to revisit welfare programs here in georgia?

    The idea that a “minimum wage” should be turned into a “living wage” seems to be the underlying question.

    But if the minimum wage still means you need to go on any number of welfare programs, have you solved any problem?

    By looking at the eligibility and usage of welfare programs, the minimum wage should be set to either minimize welfare recipients (because you’re making enough), or welfare should be acknowledged as a benefits programs for those who make minimum wage. The delta between the two would be a “living wage”.

    • Jon Richards says:

      Your argument implies that minimum wage workers are the sole breadwinners in their households., which as Gabe points out above is usually not the case. The teenager who gets his or her first job at McDonalds at minimum wage is likely not a welfare candidate.

      • Rich says:

        According to the Bureau of Labor Statistics for 2012, 88% of minimum wage worker are adults 20 and over and 36% are 40 and over.

        Even for teenagers, wouldn’t parents be appreciative if their children earned enough to make taking on a job more tempting. A few might be thrilled if their teenager earned enough to move out of the house.

        The statement “Who gets paid the minimum wage? Typically entry-level workers at fast food chains like McDonalds ” is almost condescending. It reminds me of the “Trading Places” explanation of commodities trading: “…Pork bellies, which is used to make bacon, which you might find in a ‘bacon and lettuce and tomato’ sandwich.”

      • Jackster says:

        It seems Gabe is quoting Heritage’s talking points:

        I found the 2.9% stat to be a bit low, so I did some digging. I found this data set from the Economic Policy Institute (, which shows that about 23% of Americans would be affected by a minimum wage increase.

        22% – 10x that of 2.9 %

        Also, my argument is that those making the min. wage are probably in households who qualify for welfare, based on the qualifications (300-400% of poverty level) –

        I’m not making an agrument about teenagers getting their job @ McD (only 3.3% of the workforce is under 20 – EPI data set above)

        I’m simply asking if we should be talking about a living wage, not a minimum wage, since we spend a great deal of our state, federal, and local budgets on welfare, but have no idea how to actually curb economic mobility.

        • Jackster says:

          Also, if we want to give access to higher paying jobs, then I have to ask the following:

          1) Why is a college degree REQUIRED for all sorts of jobs that probably don’t actually need it, like IT analysts, clerks, or anything else that can be trained OJT?

          2) Background checks have gotten out of hand – between credit score and criminal records, it’s easy enough to push qualified folks out of the hiring process, simply because you don’t like the fact that they got in a bar fight some years ago, or had a warrant issued for their arrest in their past.

          • John Pezold says:

            I agree with your first point. As to your second point, I’ll say this: they HAVE gotten out of hand, but from a liability/insurance standpoint, it’s practically required if you want to have coverage.

            People sue (or threaten to sue) for EVERYTHING.

        • John Pezold says:

          I’m not an economist, but am pretty close to the situation. As Jon mentioned, margins in the QSR industry are pretty thin. If minimum wage were to be increased, say, to $15, everybody’s wages would increase by AT LEAST $8. Likely more than that. With labor costs sometimes doubling across the board, sales would have to increase by more than 300% in order to keep pace with the cost increase. That is, of course, unless prices were raised substantially…which would undoubtedly have to happen.

          Then the question is this: How much of a price increase are customers willing to bear? The answer? Not much.

          Another problem? Large companies with deep lobbying pockets would certainly petition to get waivers (and they’d probably get them too). Remember, independent franchisees are different from the franchiser. Franchisees are simply small business owners, and don’t get the same preferential treatment that the big corporations get.

          Further, the massive cost increase for consumers (you know, many of the same people getting the minimum wage increases) would make it more expensive to live, thus putting us in the same situation we started out with. We’d ultimately be having this same discussion down the road about moving minimum wage to $30 rather than a paltry $15. Meanwhile, less and less people would be working.

          Technology is making it easier and easier to automate. People value ease of use, and kiosks are becoming more intuitive with every advancement. At some point it’s going to become more cost effective for the small business owner to utilize this technology (and others, such as mobile phone-based ordering), thus reducing the demand for human labor.

          • John Konop says:


            First, workers making below the poverty level on a macro are subsidized by tax payers one way or another……..Second, the labor cost would only go up a few points… have to take into consideration, management, tips, commissions, workers making above min. wage…….when you do that it is not that large of an impact on a macro on labor cost. Third, conservatives use to argue that disposable income by workers is good for the economy ie which is why they were against taxing tips years ago……I happen to agree with Henry Ford it is good for the economy to have workers make enough money to buy the products they produce….Adam Smith the father of free market referred to it as distribution……ie strong middle class-strong economy……high spread between rich and poor creates problems with money flowing through the economy…..finally if people have more money to spend than in theory it will left all ships….ie inflation is neither good or bad….the real formula is real wages…..

            • John Pezold says:

              If someone in our organization is making $11/hr, and minimum wage goes to $15, then it would be unjust for that employee to simply be bumped up to $15/hr, no? I’d be ticked off of all of a sudden I was making the same as a new, unproven kid walking through the door for the first time. So yes, everyone’s wages would be increased by a similar amount. $11 would be bumped to $19 or so.

              I agree with Henry Ford too. But we’re making $1 hamburgers, not $30k automobiles.

              • John Konop says:

                You oviously do not get the concept……The point Henry Ford made was about maco consumption of working class people helping the economy ie the distribution point Adam Smith made….

                • John Konop says:

                  John this would help your sector the best……your consumers spend and do not save…….a price wage increase would be a major gain verse a 5 or even a 10 percent price hike…..also your contribution for sale ie average ticket would increase ie lower your labor cost on a macro…..

                  In all due respect you need to get out of the race to the bottom economic model…..your products do even better than high ticket for low end consumers…..

            • Jon Richards says:

              John K, the issue I have with the subsidized anyway argument is that raising the minimum wage affects far more people than just those who are currently subsidized by taxpayers. It would be better to figure out some way of better serving the truly in need. This argument reminds me of how, in an effort to find a way to insure everyone, we came up with the ACA, which has disrupted the entire market.

              I’m also not sure you could argue that labor costs would only go up by a few points. If you raise the wages of your lowest paid employee, then others further up the ladder would want comparable raises. In John’s case, he might find that by raising the pay of his entry-level employees, they would be making more than those who have been around a while and have gotten merit raises.

            • “I happen to agree with Henry Ford it is good for the economy to have workers make enough money to buy the products they produce”

              So Lear / Boeing / Gulfstream employees should all be able to afford their own jets? 😉

              • saltycracker says:

                Without income taxes. 🙂 The better way to get GA folks out of poverty would be more focus on trade schools and an uncomplicated tax reform that cuts across all businesses to drive businesses to GA.
                Our current republican direction is selective tax breaks while the democrats push for supports. This may create jobs for public workers and their minions.
                You should not legislate an economy by such selection. The min wage is just a bargaining chip.
                Overhaul the tax code and create the environment.

          • Jackster says:


            No offense to you as the McDonald’s Franchisee, but part of me thinks we should do away with so many fast food (QSR) restaurants. Perhaps that would lower our healthcare costs and start to have people associate eating out with quality food and saving money if they don’t.

            If the technology is going to less human labor, then I would also argue that the food itself will eventually become more of a “product” than actual food.

            So then why don’t you just go there entirely? What’s stopping the industry?

            • John Pezold says:

              First off, it’s virtually impossible to offend me, so none taken.

              Who is ‘we’? ‘We’ meaning the government, or ‘we’ meaning the consumers? In the marketplace, people vote with their dollars. If our restaurants fail to provide value to our customers and our community in the form of quality, service, and cleanliness, then they will vote with their dollars and we’ll be out of business. It’s that simple.

              We’ve consistently retooled our menu to add healthy choices. Apple slices in happy meals, salads, nonfat milk, etc. We also took the lead in posting calorie content and nutritional information on our menu board and packaging. Without turning this into an infomercial, I think we’ve done a good job of giving people sound options. But again, people vote with their dollars. I’d venture to guess that if we scrapped the menu and sold nothing but kale and tofu, you’d get your wish about having less QSR restaurants.

              • benevolus says:

                “in the form of quality, service, and cleanliness”
                That is so patently false it is laughable. The biggest selling food joints sell the lowest quality food they are allowed to. Restaurants have to be forced to not sell us stuff known to clog our arteries or give us diabetes. And they fight tooth and nail to prevent us from knowing what is in their food every step of the way.

                For many (most?) people, upfront cost is the only criteria, or at least the dominant one.

                I like having access to my fast food as well as the next guy, but don’t try to pretend the “the almighty market” will protect us from danger. The market doesn’t protect us from anything.

          • Jackster says:

            But do your employees work at your restaurants because that’s all the work they can get, because they want some sort of work, or some other variation?

            Do you offer health insurance or benefits as part of your comp? I would wonder if they would then qualify for welfare programs, since they have a job, but the family is probably similarly employed and therefore below the qualifying poverty level.

            • John Pezold says:

              We do offer benefits to salaried managers. Also we’re about to open a health clinic in town just for our employees. To my knowledge that hasn’t been done in our industry.

              • Jackster says:

                I can’t speak for your industry, but as I work in the healthcare rev cycle world, I can tell you without hesitation that there are many small companies that contract with practices and hospitals for that same sort of capability.

                It’s a great move, and you gain cool points for managing your business in a constructive manner.

                • John Pezold says:

                  It makes sense to do it. Keeps people happy, working, getting paychecks, etc. Keeps turnover (relatively) low, which beats the heck out of a revolving door.

          • benevolus says:

            You are posing unrealistic scenarios.

            No chance $15/hr happens all at once or even within a couple of years.
            A small increase for minimum wage therefore would not effect most wages above that.
            A small increase in prices can be tolerated especially since all your competitors have the same extra cost. What are we talking, a couple of cents per item?
            If large corporations’ lobbyists are a problem, perhaps we should fix that instead of throwing minimum wage earners under the bus because we don’t want to fight them.

            • John Pezold says:

              I just LOVE it when people scoff at the prospect of DOUBLING the second-largest line item on an income statement. Please, tell me more!

  5. Noway says:

    C’mon, people!! I’m over here waiting breathlessly for the “You can’t raise a family of four on the minimum wage!” tripe. You libs are really falling down this morning!

    • Jackster says:

      Sure you can – you just have to work 50 hours a week, rely on family for day care (since GA doesn’t subsidize it), have your kids on peach care, and rely on public transit.

  6. Harry says:

    Is it true unions support minimum wage increases not out of altruistic reasons, but because their contracts are often based on some multiple of the minimum?

    • saltycracker says:

      Back in day I was into negotiations minimum wage never came up. It just wasn’t a good benchmark for either side but I was dealing with mostly skilled workers. The farms went to piece work, illegals, cash, exemptions or a combo of those.

  7. Baker says: (I can’t lay it out any clearer than these folks so I won’t bother)

    1) For every 10 percent increase in the minimum wage, teen employment at small businesses is estimated to decrease by 4.6 to 9.0 percent.
    According to the U.S. Bureau of Labor Statistics, teen unemployment averaged a record high 24.3 percent in 2009.

    2) For every 10 percent increase in the minimum wage, estimates show employment may fall as much as 6.6 percent for young black and Hispanic teens ages 16 to 19.
    African American teen unemployment averaged 39.5 percent in 2009, which is more than four times the national unemployment average and 26 percent higher than last year.

    3) According to recent U.S. Census data, only 16.5 percent of minimum wage recipients are raising a family on the minimum wage. The remaining 83.5 percent are teenagers living with working parents, adults living alone, or dual-earner married couples. Raising the minimum wage is an ineffective tool to fight poverty. Programs like the Earned Income Tax Credit are far better at helping low-income Americans.

    4) The average annual family income of those earning the minimum wage in 2009 is over $48,000.
    One study found that only 10.5 percent of the beneficiaries of then-candidate Obama’s proposal to raise the minimum wage to $9.50 would come from poor families.

    5) Economists at the University of California-Irvine and the Federal Reserve reviewed the economic evidence and found a majority in support of “the view that minimum wages reduce the employment of low-wage workers.”

    Between July 2007 and July 2009, the federal minimum wage increased by 40 percent. A new study from Ball State University found there were 550,000 fewer part-time jobs as a result of this increase.

    Federal policy makers allowed the wage hike to go through despite decades of research showing that minimum wage hikes take a sledgehammer to the entry-level job market. As employers are faced with higher labor costs, they hire workers who have more work experience or higher skill levels. This leaves unskilled applicants without a job, and without the invisible curriculum that comes with a first job experience.

    • saltycracker says:

      Correct and the employers will get smarter while the democrats keep more on the plantation. This is not a win area for the Republicans as they can’t sell the “we’re concerned for the poor folks here”. See my post under Tuesday daily. Repubs can use this for reform in the tax code and immigration.

    • Dave Bearse says:

      “Between July 2007 and July 2009, the federal minimum wage increased by 40 percent.”

      Federal minimum wage going from $5.85 in 2007 to $7.25 in $7.25 is a 24%, not a 40% increase.

      Kind of undermines the credibility of your source.

  8. benevolus says:

    Why don’t we have a thread like “should we cap CEO pay” or something like that sometime?
    We get plenty of opportunities to generalize about and bash poor people.

    We need more opportunities to generalize about and bash rich people and corporations.

  9. joe says:

    If the GA minimum is raised to the federal minimum, is there something else that is tied to the GA minimum that will go up?

    • seenbetrdayz says:

      If the GA minimum wage goes up to the federal minimum, then I don’t think anything changes. They’re going to go with whichever one is higher. Workers have to be paid at least 7.25, so it would be a waste of time to discuss a GA state increase unless it goes to at least 7.26.

      The problem with a federal minimum wage is the wide disparity in regional cost-of-living. It’s understandable why a fast-food worker in San Fran would want an increase above and beyond $10. It’s pretty damned expensive to live in San Fran (or anywhere in California, for that matter). It’s not, however, quite so expensive to live in Iron City, GA. (although they do have a Wikipedia entry, movin’ on up, Iron City!)

  10. Jackster says:

    I’m thinking the minimum wage should be re-tooled to address areas where there is no revenue return – teachers and other services come to mind.

    Perhaps there should also be some consideration for student loans, healthcare costs, and any long term benefits to society (like safe communities).

    But I don’t think it should have anything to do with just a number – at that point, it shuold be localized to cost of living and set to CPI, since really that’s what’s needed to live in that area.

    • Jon Richards says:

      It sounds like you’re advocating a top-down bureaucratic approach to setting wages. Wouldn’t a better idea be to lower unemployment to the point where employers have to raise wages in order to compete for workers?

      • Jackster says:

        You have two arguments here:

        1) Should we have a min. wage

        2) If so, what should it be?

        So I’m simply saying that if #2 is up for grabs, then make it something that makes sense and not an arbitrary number. It’s top down bureaucratic in its current form.

        I would love to lower unemployment – in fact, I think that’s a fantastic value. That’s why I proposed the two other ideas above.

        Otherwise, we should rally be discussing the merits of having a min. wage, and what it should actually serve to promote.

        • Jackster says:

          Wait – I re-read the comments. Yeah, I suppose it could be construed as “top down”.

          I meant to raise the question of does everyone need a minimum wage, or should it be dependent on the industry. I threw out the example of teachers, since they return no revenue to the organization and their efforts are too long term to measure directly.

  11. Jackster says:

    So I found a few articles stating $10 / hr is the price point for wages., but by 2016.


    So why doesn’t the proposal by SSen. James propose to marry the state min. wage to the federal one? Not just a raise to $7.25, but also the increase based on inflation. She doesn’t think the locals will go for $10, but she wants to seem strong on it.

    But I’m wondering if we’re talking about it at all, shouldn’t it have more to do with cost of living than an arbitrary number?

  12. Dave Bearse says:

    I suggest the Bureau of Labor Statistics “Characteristics of Minimum Wage Earners 2012” as a source concerning minimum wage employees:

    4.7% of workers earn minimum or less wage nationally, 6.4% do in Georgia. Only AR, ID, LS, TX and VA have higher percentages.

    21.1% of workers 16-19 years of age earn minimum or less wages, but those workers constitute only 5.4% of the minimum or less wage earners

    2.9% of workers 25 years or older earn minimum or less wages, and those workers constitute 80.2% of the minimum or less wage earners

  13. godsgift says:

    so lets review, they should not raise wage cause it will cost prices to go gas should not go up cause ti will cause prices to go up,power,food and on and on because any price increase will gee cause prices to go UP.but guess what prices DO go up. but not 2009 the ceo and exec got an avg 29% income increase,and i am sure you all turn down raises cause prices will go up.

    here is another tiny fact those burger flipper,shelve stocker are the one WHO MAKE the make money selling BURGERS not by the ceo giving speeches.NO BURGERS NO REVENUE.he can make all kinds on idiot choices,but the bottom line it is the store and bring in the money.NOT HIM.

    i love the saying we need to pay more to get good people to apply for top jobs,but not for the people who make the company profitable.NO ONE goes to a store cause the ceo is a great guy.

  14. godsgift says:

    calif had to pass a law,that prohibited restuarants from taking wait staff tips.companies hire illegals,so they can pay less.none of them go to place in ny had to be sued to pay its employee min wage.the gvt should not have to FORCE people to treat its workers fairly.i hate to say this but if we did not have regulations we be just like pakistan,with building falling apart.we need regulation BECAUSE people put profits above lives,and if not forced to pay a min wage they WOULD NOT.look up script pay. this was in the US. you got paid on paper,you lived in company provided housing and bought food at company store,they deducted the cost,form some ‘unknown’ reason most workers ended up owing money to the had to work to pay off the ‘debt’.look up share farmers,same thing,you did the work they ,the land owner took the money and you ended up in ‘debt’.why cause this is the land of the greed.

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