BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific Arabic Spanish Russian Chinese Welsh

 You are in:  Business
Front Page 
UK Politics 
Market Data 
Your Money 
Business Basics 
Talking Point 
In Depth 

Commonwealth Games 2002

BBC Sport

BBC Weather

Tuesday, 7 May, 2002, 12:56 GMT 13:56 UK
The fight to raise the US minimum wage
Jean Mathews proudly shows off the family photographs
Jean Mathews is angry at living pay check to pay check
test hello test
By Maggie Shiels
reporting from New Orleans

Jean Mathews proudly shows off the family photographs crowding the shelves of her wall cabinet.

Her eyes light up as she chats about her four daughters, two sons, eleven grandchildren and four great grandchildren.

She talks matter-of-factly of how for most of her working life she has held down two jobs in order to feed and clothe her kids and put some of them through college.

Louisiana as a state for the first time in history has just become number one in poverty

Beth Butler, community activist
Today Jean is taking life a bit easier by working only one job - making sandwiches for a fast food restaurant in east New Orleans earning just over $200 (148) a week.

She is proud of the fact that at 69 she is still active, but she is angry that people like her live pay check to pay check and that little is done to help lift them from the poverty trap that enslaves them.

Tom Weatherly of the Small Business Coalition to Save Jobs
Too dependent on tourism: Chamber of Commerce

That was the main reason she backed a campaign earlier in the year to introduce a measure that would ensure that every employer paid $1 over and above the federal minimum wage of $5.15.

The referendum won the overall backing of voters in New Orleans by 2-1 and would be the first in the state to affect all private sector jobs.

Legal challenge

The measure was due to come into effect on 2 May but has been on hold as it waits to go through its final legal challenge.

This would put New Orleans in an uncompetitive situation

Tom Weatherly,
New Orleans business spokesman
The Louisiana State Supreme Court meets to decide the issue on the 13th of May in a fight that campaigners describe as one that has pitted the haves against the have-nots.

The delay has been caused by the opposition of the business community which argues that the vote is illegal because of a 1997 state law that says no metropolitan area can raise the minimum wage above the federal level.

If the measure is approved, its believed New Orleans would be first city in the United States to set a minimum wage rate above the federal level.

Targeting tourism

The Chamber of Commerce and its members also claim this increase would sound the death knell for attracting new business into a city overly reliant on the hotel and tourist industry for much of its trade.

"In the past we relied too much on oil and gas and when oil and gas went bust we had real problems with our economy and we sunk into a recession during a time when the rest of the US was doing well," says Tom Weatherly of the Small Business Coalition to Save Jobs.

"Our concern is that we are becoming too dependent on tourism so that when 911 (the September 11th attacks) happens that puts us in very bad straights. We need to diversify." he added.

That does not justify keeping poor people down argues ACORN, the Association of Community Organisations for Reform Now, and one of the main groups that campaigned to get the dollar increase passed.

Poverty trap

Spokeswoman Beth Butler says, "Louisiana as a state for the first time in history has just become number one in poverty according to the most recent census."

"We have been driven down while other states have grown, and part of this fight with the business groups is they want to keep people in poverty so they can have a nickel more."

The Bush administration has said it is willing to support a $1-an-hour increase in the federal minimum wage, but only if that increase is not mandatory, eliminating a uniform national minimum wage for the first time since the Fair Labour Standards Act became law in 1938.

ACORN says a single parent supporting two children by working full time for minimum wage earns $10,712, that is $3,417 less than the federal poverty threshold of $14,129 for a family of three.

For someone like Jean Mathews the extra dollar would have a significant impact on her lifestyle.

"It would make a lot of difference for me. I pay some $500 a month for rent and with utilities, telephone and groceries on top, I don'thave nothing left. With this extra dollar I could pay another bill."

Competitive concerns

ACORN's Beth Butler maintains that far from being bad for the economy, the wage increase for the 74,000 low income workers who stand to benefit will boost the economy.

"They are going to spend every dollar in their community and studies have shown that that adds up to $50m a year. This kind of money coming back into the city would be the same as having a [major] company relocate here."

Tom Weatherly is unmoved.

"We already have to compete with Dallas and Houston and Atlanta. If this issue was passed we would be in competition with our next door neighbour. And as far as attracting business and retaining business this would put New Orleans in an uncompetitive situation."

Other cities and states - who traditionally compete with each other by offering tax incentives for business - will be watching closely.

See also:

25 Oct 01 | Business
Rights for temporary workers
Internet links:

The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.

E-mail this story to a friend

Links to more Business stories