Minimum Wage Hike Takes Effect Tomorrow

In May, Congress passed and President Bush signed the first federal minimum wage increase in a decade. Tomorrow’s increase, the first of three planned through 2009, is expected both to provide only meager help for workers and to have minimal impact on most employers nationwide.

For the first time in a decade, the federal minimum wage will rise tomorrow: from $5.15 to $5.85 an hour.

The minimum wage will increase by 70 cents again to $6.55 on July 24, 2008, and once more on July 24, 2009, ending at $7.25 per hour.

And while “many lawmakers, along with advocates for low-wage workers, are celebrating tomorrow’s increase in the federal minimum wage … many acknowledge that raising it from $5.15 to $5.85 will provide only meager help for some of the lowest paid workers” (Associated Press). While helpful to employees, the impact appears to be minimal.

AP reports:

Minimum wage workers will get an additional 70-cent boost each summer for the next two years, ending in 2009 at $7.25 an hour. That comes to just above $15,000 yearly before taxes for a 52-week work year. Now, someone in such a job and earning $5.85 an hour would bring home $12,168 a year before taxes. The federal poverty level for singles is $10,210, couples is $13,690 and $17,170 for families of three.

About 1.7 million people made $5.15 or less in 2006, according to the Labor Department‘s Bureau of Labor Statistics. A full-time worker making $5.15 an hour earns $10,712 a year, according to numbers from the Economic Policy Institute.

Moreover, tomorrow’s increase is expected to have minimal impact on most employers nationwide, according to CCH Internet Research Network, considering that 32 states and the District of Columbia have already established minimum wage levels higher than the new federal level.

“Over the last 10 years, while the federal minimum wage has been steady at $5.15 per hour, more and more states have set their minimum wages above that, and above the new minimum as well,” said Barbara O’Dell, CCH workplace analyst, in a statement. “Employers, especially those who operate in several different states, will have to keep aware of a changing environment as federal and states’ rates criss-cross in the years ahead.”

Plus, as employers seek to attract talented employees, the supposed unavailability of qualified employees has caused many employers to raise wages beyond both their state and federal minimum wage requirements. In fact, according to a survey of 18,000 small businesses by national payroll service provider SurePayroll earlier this year, the majority of small business owners (51 percent) didn’t even know the minimum wage required in their state.

According to the survey:

Of the small business owners surveyed by SurePayroll, only 3 percent pay the national minimum wage to some of their employees. Only 6 percent of the respondents pay a state-mandated minimum wage to some of their employees. The remaining respondents (91 percent) are not affected by minimum wage laws because they pay all of their employees more than the minimum wage.

Where state and federal minimum wage rates differ, the higher rate prevails.

Some quick facts from CCH:

Alabama, Louisiana, Mississippi, South Carolina and Tennessee do not have state minimum wage laws, so employers must pay the federal rate to employees who are subject to the Fair Labor Standards Act (FLSA).

In Georgia, Kansas, New Mexico, Utah and Wyoming, the state minimum wage rates are lower than the revised federal rate, so employers must pay the federal rate to employees who are subject to the FLSA.

In Idaho, Indiana, New Hampshire, North Dakota, Oklahoma, South Dakota, Texas and Virginia, the state rates are tied to the federal rate and will automatically increase.

In Minnesota, Montana and Nevada, some employers currently paying a state-authorized lower minimum wage based on their size or offering benefits will be affected by the federal increase.

The EPI says, “This bill will provide a wage boost for 12.5 million workers.” (The EPI also provides a handy state-by-state projection of the required minimum wage by date, from May 25, 2007 to July 24, 2009.)

Meanwhile, AP points out a PNC Economic Outlook survey done in April that showed three out of four small- and middle-market business owners said raising the minimum wage would have little or no impact on their businesses.


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  • July 23, 2007

    Wow, It must have been hard for congress to pass a raise in pay under $15-20K/year seeing that is what they normally vote themselves in for.

    This increase (at least in Maine) is $5.00 under the limit for qualifing for food stamps. Thank God the state of Maine has it’s own minimum wage of $7.50 and the average employer’s pay is over that…….let’s not get excited, for many still need help with the basics making $10./hr.

    This increase is such a slap in the average American’s face, and especially by those who make (without the side deals) anywhere from $100-200K/year, and with full medical and full pay retirement plans.

  • JOHN
    July 24, 2007

    What happened to the idea that people were responsible for their own fate? What series of events puts a person in the position of having job skill levels that will only position them for minimum wage earnings? Could it be perhaps that in high school they were more interested in being “cool” than studying? Could it be that they thought that because they were some cool jock that upon graduation some employer would need to field a team? Why were peers able to secure work that allows them to earn a living and better wage…are they just plain smarter, or did they apply themselves in school?

    I agree with Norman, it is a slap in the face of the average American…why should I be forced to pay more for goods and services because the government has decided that they can set the value of work better than the marketplace?

    Contrary to popular sentiment, I am damn tired of being my brother’s keeper. My brother needs to be responsible for his own actions, get off his lazy ass and provide for himself and for those to whom he is responsible. Oh yes, Norman that slap you refer to by thsoe who make anywhere from $100-200K/year are probably the people who applied themselves at the high school and college level, invested time and dollars in themselves, risked much and in all probability provide your complaining backside the job you enjoy.

    We all want to bitch about the so-called rich (that’s anybody who makes more than you), but do you provide work for others by operating a business? Do you pay the amounts to support local, state and federal government in taxes that business owners do?

    Don’t consider percents…percents do not pay expenses, DOLLARS pay expenses. The complaint that you can’t live on the minimum wage shows the lack of understanding that those earning at that level seem to possess. It is not intended to be a living wage for a family, if it was it would be called the “Living Wage”. If we choose to position it as a living wage…how do we apply it? If two persons in a family both work and earn that “living wage”..they now have two times a living wage…if their offspring work…they could have three or four times a living wage. In this convoluted social logic that calls for a living wage as a minimum…how do you make it fair for a one worker family?

    The minimum wage is simply the least amount that can be paid a worker for services performed. If you don’t want to work for that amount…secure skills that will allow you to provide services that business is willing to pay more for. If your high school experience is such that you don’t have those skills…look at job skills programs, there are enough of those government programs available paid for by those of us who decided we were responsible for our own future and secured the education when it was offered.

    In short, throwing more dollars at people who have no skills is a short term solution to a problem that will not go away until they decide to accept personal responsibility for the place they are in life and then do something about it.
    Norman, you are part of what is wrong with this country, success is not a right, it is an earned condition. The only right is the right to pursue success on an even playing field…you help those in need as long as they are helping themselves, but once they still need help with the basics making $10./hr. perhaps those who want to help really just want to feel good about themselves….after all as it was once said..”where would good works and charity be without the poor?”

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