Wage hike’s effect on Oklahoma argued as changes are pending

The third and final minimum wage increase mandated by Congress in 2007 goes into effect Friday, bumping up the hourly wage to $7.25 an hour from the $6.55 it was increased to last summer.

But in the worst economy the United States has endured in decades, experts and economists are debating whether the increase will hurt or help a nation struggling with a 26-year high unemployment rate and job losses totaling 6.5 million since the recession began.

On the positive side, workers earning more money are likely to spend more, which could help the ailing economy.

But employers who now must pay more to workers could cut back on new hires to offset the higher cost of doing business.

"It’s a tough economy, and it’s gotten tougher in the last year,” said Mike Seney, senior vice president of operations at The State Chamber of Commerce.

Although most small state employers already pay minimum wage or more, Seney said, "It’s another hit on the bottom line for small businesses” that will affect the cost of workers compensation rates, unemployment compensation and Social Security costs.

"All those taxes go up as payroll goes up,” he said. "We may see a negative impact on the amount of young workers being brought in.”

Will it impact prices?

But businesses absorbing those increased costs shouldn’t affect consumers, at least not now, a local economist believes.

"Considering the current economic climate, it would be very difficult for companies to pass along these extra costs in the form of higher prices,” said Steve Agee, an Oklahoma City University economics professor and director of the school’s Economic Research & Policy Institute.

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