Year-Around Jobs Most Pressing Need for Local Workforce
Minimum Wage Hike Will Have Indirect Impact Here; Most Employees Pay More Owing to Labor Shortage
By Ellen Paquin

Increases in the state's minimum wage will not apply directly to many workers in Mackinac County because most local employers already are paying higher wages. But they will have an indirect impact as the wage floor for a few workers is raised and a ripple effect will eventually move upward to middle-income workers, said Jay Caldwell, Mackinac County coordinator of Michigan Works! in St. Ignace. The most pressing need for the county's workforce, he said, is year-around jobs.

Mr. Caldwell said he is hearing a "happy" reaction from low income workers in the county, as minimum wage took its first of several planned jumps in October, and on the whole, "not very many complaints" about the move from employers and business owners, who report that a local labor shortage during the busiest season has already driven wages higher than the minimum.

Mr. Caldwell works with unemployed and underemployed people across the Eastern Upper Peninsula.

"I don't see that many people complaining about it," Mr. Caldwell said January 12 of the wage hike. "Most employers in the area have been decent about pay and were paying upwards of $7 an hour anyway.

"In past years, raises to the minimum wage have brought some complaints, but it really does nothing for us but improve. A few businesses say that instead of hiring 10 employees, they might only have nine for a while. But if the business is there, you're going to eventually bring another person on."

For the first time in nine years, Michigan's minimum wage was raised October 1, 2006, from $5.15 per hour to $6.95 per hour. Another wage hike is planned for July 1, to $7.15 per hour, and a year later, it will move to $7.40 per hour. About 90,000 people in Michigan work for minimum wage.

No statistics are available to show how many workers in the county are paid at the minimum rate, Mr. Caldwell said, and the number is probably constantly fluctuating. Of the county's labor force of roughly 6,600 people, those in the service industries, such as restaurant and hotel workers, are the most likely to be initially hired at that rate, although many employers quickly move workers up to $7 per hour or more to compete with other businesses for needed workers.

Tipped employees, such as waitresses, are also guaranteed at least the minimum wage. They must be paid at least $2.65 per hour and must provide their employer an itemized list of tips earned. If the tips plus the hourly wage do not meet the state's minimum wage, the employer is required to pay the difference, Mr. Caldwell pointed out.

The largest employers in Mackinac County are the Sault Ste. Marie Tribe of Chippewa Indians, Mackinac Straits Hospital, and the Michigan Department of Corrections. Although not mandated to do so, the tribe raised its pay scale to match the state's minimum wage hike in October, a move affecting 225 workers, mostly at Kewadin Casino, and adjusted the wage grid of all entry level positions.

Just as Mr. Caldwell expects to see in service industry jobs over the coming year, the tribe's workers with wages just above the minimum rate also received pay hikes, as did all those in departments with adjusted starting salaries.

"I've heard some employees make a comment that they're making $7.50 and want their wage raised, too, because the $5.15 guy on the job now makes $6.95," Mr. Caldwell said. "I say, be thankful you have a job. If you have a job, hang onto it. There aren't a lot of jobs out there."

Unemployed Workers Hit Hard

This Season

The county's unemployment rate, averaged over the year, has hovered around 10 percent for the past three years, Mr. Caldwell said, and with a poor state economy dragging down the local tourism industry, seasonal workers are having a particularly rough year now, "probably the worst I've seen it," he said.

Service jobs comprise the bulk of the jobs in the county and were effected this year by a shorter tourism season as many businesses laid off workers in September, with some offering only two weeks of work in October. Earlier than usual, seasonal workers turned to unemployment, and with unemployment benefits now based on quarters of the year, rather than weeks worked, some local workers no longer qualify for benefits because their earnings were not spread out, as required, over the seasons, Mr. Caldwell explained. Many workers in the construction trades, another industry strongly represented in the county, did not qualify for unemployment benefits for the same reason.

"Construction has been down this year, that's a big one, and there was a poor tourism season," Mr. Caldwell said. "People had a shorter season. I don't like to use that word, but that's what it is up here. We had people not called back to work until June, instead of May."

"In one kind of situation, people who used to make unemployment no longer qualify because their earnings are not spread out properly," Mr. Caldwell said. "I had one man in my office recently who worked construction and had made $10,000 in one quarter, but only $2,000 in the other three quarters of the year, so he did not qualify for unemployment."

Such cases can be appealed to the Unemployment Resolution Office in Gaylord, Mr. Caldwell said. To qualify for unemployment, a worker must earn at least half as much in each of the remaining three quarters of the year as he earns in his highest paid quarter, under a system that went into effect in 2001.

A handful of seasonal businesses in the area closed September 29 last year, rather than remaining open through October, to avoid the headaches of processing the minimum wage increase that took effect October 1. Mr. Caldwell said he is aware of five or six such cases.

"They didn't want to deal with the minimum wage hike because their payroll programs and everything would have to be changed," he said. "Business was bad enough anyway that they just said, 'That's it for the year.'"

The Michigan Works! office has seen 659 unemployed people seeking work in October, November, and December, 2006, and served 994 job seekers in last year's "unemployment season" from October through February. Workers use the office to update resumes, necessary for filing unemployment claims, as well as employment counseling, on-the-job training, and job search programs.

While some economists have questioned whether boosting the minimum wage actually raises the standard of living for working families, or just benefits young people (most likely teenagers) taking entrylevel jobs, Mr. Caldwell said in the Straits area, he believes the ripple effect from the minimum wage hike will help working adults most of all and speculated some businesses may be able to make up their financial losses by perhaps hiring one fewer worker for the summer, or putting small price increases in place.

Restaurants, Hotels Are Paying

More Than $7 Now

Longtime St. Ignace businessman Jim Clapperton agrees price increases are likely, saying that small business owners don't have the extra money to absorb the costs of higher wages.

"We have to consider what it will do to our prices," Mr. Clapperton said. He employs six people yeararound at his Pizza Guys restaurant and 35 people seasonally at North Bay Inn, and has been in the business for 27 years. Mr. Clapperton said he has no employees earning minimum wage now.

"I haven't been paying below $7 for at least the last five years, due to the local labor shortage," Mr. Clapperton said. "There will definitely be a ripple effect to the higher paid workers. It's hard to pass that cost along to the consumer. For a lot of us in the restaurant business, we are bumping our heads against the ceiling of how much you can charge for a hamburger. But I don't begrudge anyone the chance to make more money. Our area is so economically deprived, I think anything that puts more money in the pockets of workers is a good thing.

"The trade magazines claim most of that wage hike is inflational," Mr. Clapperton said. "In other words, it goes to taxes rather than helping workers."

Ultimately, the consumers will pay the costs of the wage hike, he said, including "hidden" costs of employers' payroll taxes.

International workers, such as those from Jamaica, employed here seasonally through work visa programs, have federally-mandated wages which are set above the minimum wage and vary depending upon federally set categories in which each person works, Mr. Clapperton said.

David Swope of the St. Ignace Budget Host Inn sees the same trend, and points out that no one is paying the minimum wage in the local motel industry because employers are facing a labor shortage. He employs 15 people and represents lodging businesses in St. Ignace as the president of the Visitors Bureau.

"In southern Michigan, the motels are paying the minimum wage, but here, $7, or probably more, is paid everywhere" to attract workers, Mr. Swope said. "We don't have the labor force. It's simple supply and demand.

"It would be difficult to survive on that minimum wage money. But businesses can't absorb the raise, they're on thin ice already, so prices will ultimately go up."

Most Pressing Need for Local

Workers: Year Around Jobs

At Michigan Works!, Jay Caldwell said the most pressing need for the local workforce is year-around employment.

"I think what woke up a lot of people in this area was Tech- Optics coming in, and then leaving," Mr. Caldwell said of the small factory that operated in St. Ignace in 2005 and 2006. "It was nobody's fault they moved, just phenomenal growth for them. It awoke a lot of people to realize something of that nature can come in and cause no pollution, no problems. People were happy to have that year-around employment."

Strong attendance at a January 9 workshop for small town growth, held at Little Bear East Arena in St. Ignace, shows that "there are people in key positions who now understand the problem," he said.

Dulcey Kantola of the Work First program agreed, calling upon city leaders to be proactive in resolving the need for year-around jobs.

"It is so imperative that our city fathers and the powers that be realize we have to actively recruit employers to provide year-around employment," Ms. Kantola said. "We can no longer subsist on seasonal tourism. We're under the gun right now to restructure employment in the area, to find new ways to actively search and promote businesses moving into the area.

Another need in St. Ignace is for more affordable housing for working families, she said, pointing out that housing is always contingent upon employment.

"We can play a role in these improvements by working with underemployed people in the area," Ms. Kantola said of the Work First and Michigan Works! programs.