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Student workers grapple with effects of low wages

Shavon Flowers (left) and Meghan Eisenhardt, a sophomore undecided major from Greensboro, work at Granville Towers. Both have worked there since September 2013, Eisenhardt as a desk attendant and Flowers as a receptionist.
Shavon Flowers (left) and Meghan Eisenhardt, a sophomore undecided major from Greensboro, work at Granville Towers. Both have worked there since September 2013, Eisenhardt as a desk attendant and Flowers as a receptionist.

This fall, she got a second job as a tutor at the UNC Writing Center, which pays $10 an hour. Though she tried to juggle both for a few weeks, it quickly became too much — and she quit her office assistant job.

“I think it was not always worth the effort to work for only $7.25,” she said, adding that her tutor work is enough to help pay for graduate school applications.

North Carolina’s minimum wage is the same as the federal minimum wage: $7.25 hourly.

In February, President Obama called for a gradual increase in the federal minimum wage — which was last raised in 2009 — to $10.10 an hour by 2016.

The Congressional Budget Office, a nonpartisan government agency that analyzes the economic impact of government policies, estimated that approximately 16.5 million people nationwide would see their earnings increase if the minimum wage were raised.

According to CBO estimates, 900,000 people would be raised above the poverty line, while 500,000 jobs would be lost as a result of the increase.

College students who work part-time to help defray college costs and other expenses would also benefit from a minimum wage increase.

“If I’m working 10 hours a week outside of my school work, if it is very low-wage, then there is more pressure to work more hours,” said T. William Lester, a professor of city and regional planning. “A higher wage makes that balance a little more manageable.”

Ripple effects

Sophomore Meghan Eisenhardt works as a desk attendant at Granville Towers and recently began working at the Franklin Hotel to pay for some of her expenses at school. Eisenhardt said she supports a minimum wage increase.

“I would probably work a little less, but not much less,” she said. “It would be nice to be able to save some money instead of spending it all.”

Stephen Lich-Tyler, an economics professor at UNC, said the South generally has lower wages than other regions do.

“I think it is to the benefit of the South that we have lower wages than in the Midwest or the Northeast,” he said. “A lot of manufacturing has moved down here.”

Jeffrey Miron, an economist at Harvard University and the libertarian-leaning Cato Institute, said the minimum wage might prevent employers from creating low-wage jobs.

“It is an issue of a zero income versus a very low income,” Miron said. “If that person’s skill set can only command a $4 wage, then preventing that person from working does not benefit them.”

Improving schools or job training, he said, would be a better way of improving a person’s earnings than increasing the minimum wage.

In Orange County, according to the National Low-Income Housing Coalition, residents have to work more than two full-time minimum wage jobs to afford the market-rate rent for a two-bedroom apartment.

Raising the minimum wage has become a contentious issue in North Carolina’s U.S. Senate race, as Democratic Sen. Kay Hagan supports the federal minimum wage increase, while Republican challenger Thom Tillis says the minimum wage should be decided on the state level.

The political gridlock over the federal minimum wage, as well as increased attention in urban areas, Lester said, is why municipalities like Seattle and San Francisco have enacted higher minimum wages.

He said growing income inequality is a driving factor in the debate.

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“Cities tend to have a deeper discrepancy. Los Angeles is very different if you are a movie star or a minimum wage worker,” Lester said. “As income inequality grows in the state, it will become a bigger issue.”

The power imbalance

Given the slow pace of the nation’s economic recovery, some economists question whether a minimum wage hike would be a smart move. The national unemployment rate is 5.9 percent, while North Carolina’s unemployment rate sits at 6.8 percent, according to the Bureau of Labor Statistics.

North Carolina’s unemployment rate had been steadily declining during the past year, from 8 percent in August 2013 to 6.4 percent in June 2014. It ticked back up to 6.8 percent in August.

Another question involves tipped workers, such as restaurant waiters, and whether they should receive the same minimum wage as other jobs. Currently, the federal tipped minimum wage is $2.13 an hour — unless the employee does not make enough in tips to at least match the regular minimum wage.

Lester said having different rates puts additional pressure on tipped employees, especially if they are not making enough in tips.

“Think of the power imbalances,” he said. “If you don’t get the minimum wage (in tips), then it is up to you to go to your employer to demand the difference.”

Lester and Lich-Tyler agreed the minimum wage should be tied to inflation.

“In principle, it makes perfect sense to peg it to inflation,” Lich-Tyler said. “Virtually all federal taxes and benefits have been indexed.”

Barely making enough

Miron said a wage increase would help some college students, but it may also make part-time jobs harder to come by.

“It will have some effect for students who keep their jobs,” he said. “It will help them, but it will hurt the ones who no longer have a job.”

UNC sophomore Tyler Sharp works at the UNC Phonathon soliciting alumni donations, where workers make between $7.75 and $8.50 an hour. Sharpe said that the hours are flexible but that the low wage is barely enough to cover his expenses.

“I have a car payment due, and I barely make enough to cover that,” he said.

Sharpe said raising the minimum wage would help alleviate some financial pressure while he is in school.

“We have to work at least three days a week, and it can make schoolwork a little cumbersome.”

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