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Minimum wage increases across the state

Thursday, July 31, 2008

Arkansans working at minimum wage received a 30 cent hourly raise July 24, making the new rate $6.55 for 29,400 individuals across the state.

The increase comes following a 2006 raise in the state's minimum wage, from $5.85 to $6.25, which was the first of three increases provided by the enactment of the Fair Minimum Wage Act of 2007.

A third minimum wage increase to $7.25 an hour will become effective on July 24, 2009, according to the Arkansas Department of Labor.

According to a research study by the Center for the Study of Social Policy, U.S. states seeking to improve economic opportunity for families can do so by increasing compensation for low-wage workers.

"Currently, the U.S. economy is losing high-wage jobs that do not require specialized training and skills. As a result, many parents can only obtain low-wage jobs, making it difficult for them to support their families," CSSP said.

"For example, the cost of housing alone is estimated to exceed the income of two parents working full-time earning the federal minimum wage. Research indicates that moderate increases in the minimum wage have positive benefits for minimum wage earners and those just above the minimum wage and can be enacted without significant job loss, even during economic downturns," the study said.

Some area businesses that employ minimum wage workers will have to make changes to combat a blow to profits in the form of the added wage overhead.

"It will affect our bottom line. It won't affect it all that much, but a little bit," Justin Howell, general manager of Sonic in Salem, said.

Howell said he has plans in place to cut costs to recoup the newly added expenses.

"We will have to watch our scheduling, making sure we are not over scheduling or have too many people at work at once. We will need to tighten up on all of our other areas. All the repairs that we would normally call someone to come fix we will try to do as many of those as we can ourselves. We can save money in that way for our bottom line," Howell said.

Although Howell said he is working to cut expenses, the increase in overhead will eventually be passed on to the consumer.

"Right now it won't, but I believe it will. In a couple months we will do a menu change and I am sure it will go up," Howell said.

"It is just like everything else. Everything is going up and so our prices will go up which will compensate for part of that. That is the way I look at it," Howell said.

In the face of ever-rising costs and an apparent economic downturn, Howell said his business is as profitable now as ever in spite of obstacles.

"I will be honest. I have been here for the last six years. As far as our bottom line figures, they are better now than they have ever been since I have been here," he said.

"Our sales are just so much greater than what they were. We are up, for the whole year, like 14 percent. The whole year last year we were up like 11 percent. We are really starting to grow and take off. We are very pleased with that and couldn't be happier in that respect," Howell said.

This summer also marks the 70th anniversary of the FLSA, the federal law providing minimum wage, overtime and youth employment standards.

This law established the Labor Department's Wage and Hour Division, authorizing it to enforce the provisions of the law, and to educate the public on the law's protections and requirements.

By law, Arkansas employers subject to FLSA's minimum wage provisions are required to post a letter explaining the act. These notices must be in plain sight where an employee is likely to read it.

Employers and employees seeking more compliance information on the increased minimum wage may call the Wage and Hour Division's toll-free helpline at 866-4US-WAGE (487-9243).

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