Seven years without a raise for this group of workers

Bill Phelps and Camille Moran run businesses in states with radically differing rules on what workers on the bottom rung of the income ladder should make, yet they hold similar views on the federal minimum wage, which on Sunday marks a seventh year stuck at $7.25 an hour.

Both feel an increase in the minimum wage is long over due -- it's been unchanged by Congress since July 24, 2009 -- and both pay their own employees accordingly.

"We pay our seasonal workers well over the minimum wage; to me, $7.25 is a ridiculously low amount to work long hours in the heat, it's very hard labor," said Moran, the owner of Four Seasons Christmas Tree and Produce Farm in Natchitoches, Louisiana, one of 21 states where the the federal minimum serves as the official wage floor.

Since 2008, Moran has paid an hourly rate of at least $10 to her workers, who include seven full-time employees at her nursery and produce farm and an additional three seasonal workers during the Christmas holiday season. She now pays between $15 and $20 an hour, a policy that she says pays off for her business in the form of employee loyalty and performance on the job.

Moran concedes her approach is not popular among other businesses in her area. "It's a very conservative area, and most of the businesses are doing good to pay the $7.25, they do not even want to pay that."

Nearly 1,500 miles west, in Pasadena, California, Phelps runs Wetzel's Pretzels, a franchise operation of fast-food outlets in 32 states. Along with New York, California is in the process of bumping up its minimum hourly wage to $15 over the next few years.

When California hiked its minimum wage to $9 an hour from $8 nearly two years ago, Phelps was worried about the impact. Instead, outsized gains in same-store sales followed, as low-wage workers spent their additional income, a boon to the local economy. "It had a huge positive impact on our stores," he said, "and then when the minimum wage went up the second time, to $10 an hour, our same-store sales increased by almost seven percent from a year earlier."

"I was concerned as a business owner, 'what is it going to do for the stores that I own, what is it going to do for the profitability of my franchises?'" said Phelps. "And," he adds, "It's never been better."

In looking at the federal level, Phelps said he opposes taking a huge leap, such as an immediate jump to $15 an hour, saying it could rattle the U.S. economy.

Rather, he supports a stair-step approach, such as California has done, with incremental increases each year. California's unemployment rate has been falling for three years, "despite two significant minimum wage increases," he noted.

"We've seen a lot of states taking action in light of federal inaction," said David Cooper, a senior economic analyst at the liberal Economic Policy Institute (EPI), which notes 26 states and the District of Columbia have set a higher minimum wage than the federal level.

"Look at the federal number, which hasn't been raised in seven years, I think that's crazy," said Phelps. "I understand not wanting to hurt businesses, but by the same token, how do you live off of $7.25 an hour?"

The answer is poverty, at least for a family of three living the average full-time minimum wage worker's annual earnings of $14,500, according to the Obama administration, which supports proposed legislation that would bring the minimum wage to $12 an hour by 2020.

About 28 million American workers, or a quarter of the workforce, currently make less than $12 an hour, estimates Cooper at the EPI. Another 7 million would indirectly benefit by increased pay as employers adjust their wages accordingly, he added.

Efforts to raise the federal minimum wage are DOA in Congress, with its Republican majority arguing that an increase would harm businesses and force them to lay off workers.

Still, minimum wages are rising in substantial pockets of the country, as some states, cities and companies including McDonald's (MCD), Walmart (WMT), Starbucks (SBUX) and JPMorgan Chase (JPM) hike pay for fast-food workers, cashiers, baristas and bank tellers.

The White House also took action that had those working for government contractors getting a raise in January due to an executive order signed in 2014 by President Obama.

"This will make a difference folks," said Obama in requiring federal contractors start paying an hourly minimum of $10.10, starting in 2016. "Right now there's a dishwasher at Randolph Air Force Base in Texas making $7.76 an hour -- $7.76 an hour."

Had the minimum wage kept pace with U.S. economic productivity, minimum-wage workers would already be getting well over $10 an hour, Obama noted.

"At its high point, in 1968, the minimum wage was equal to about $9.65 in today's dollars. If you adjust for inflation, that means at $7.25, it's worth about 25 percent less than it was a generation ago," said the EPI's Cooper. "It's lost 10 percent of its value since it was last raised."