Overdue Minimum Wage Increase Takes Effect

Despite opposition from businesses, the federal minimum hourly wage will go up $.70 cents today to $7.25 an hour. This increase may come as a blessing to workers in low-wage jobs across the country who may not often see such wage increases.

The federal minimum wage was raised a year ago from an extremely low $5.85 an hour to $6.55. The increase to $7.25 was due today. According to the Department of Labor, over 58 percent of workers in the U.S. hold hourly wage jobs in the service industry. States like Mississippi, Oklahoma, South Carolina and Tennessee have the highest concentration of workers who are earning the minimum wage.

Minimum hourly wage standards can be increased by city, county, or state lawmakers. Many states including California, Nevada, Washington, and New Mexico have hourly wages already higher than the federal standard. But other states also have hourly wage pay standards that are lower than the federal, including Wyoming at $5.15 per hour, and Arkansas at $6.25.

But despite the modest increase to $7.25 per hour, business interests complain that the wage increases will affect small businesses. Yet, according to a survey by the National Small Business Association in 2008, the average hourly wage paid by employers who have less than 500 employees was $10 per hour. Advocates for increasing the minimum wage argue that the new standard will benefit the workers and their families, as well as the economy overall.

CNN Money in an article published on July 7, reported that:

Advocates for low wage workers believe that a higher minimum wage is a step in the right direction, even though for many people it’s barely enough to survive on.

At $7.25 an hour, a full-time worker earns $15,080. At the nationwide work week average of 33 hours, the worker would earn $12,441. The U.S. government sets the poverty level at $10,830 for one person or $22,050 for a family of four in the lower 48 states and D.C. A worker who is above the poverty level would not be eligible for certain welfare-related assistance.

“For a family to survive on $22,000, it’s impossible,” said Matt Goldberg, a staff attorney at the Legal Aid Center-Employment Law Center, an organization that advocates for low income workers. “A minimum wage job might technically keep you above the poverty line. But the practical reality is that anyone trying to survive on minimum wage is in real, real dire straights.”

Goldberg said that San Francisco, where his organization is based, imposes its own minimum wage, of $9.79 an hour.

Other groups advocating for higher wages for workers are unions. Unions particularly see a need for the minimum wage to increase for workers in the service sector since manufacturing jobs, which once provided good pay and benefits have closed down. If over half of the population in the U.S. earns hourly wages, making those jobs good middle-class jobs that pay well, could lift the economy.

Change to Win, a federation of unions that split from the AFL-CIO in 2005, supports the federal hourly wage increase, but called on lawmakers to go one step further and make the Employee Free Choice Act law. Union leaders believe that EFCA would allow workers to form unions more easily.

Chris Chafe, the Executive Director for Change to Win, issued the following statement on Friday:

“Today’s minimum wage increase is an important step in recovering our economy, rebuilding the middle class and renewing the American Dream for America’s workers. But it is only one of three prongs necessary to create a real economic stimulus package for working families. In addition to a minimum wage indexed to inflation, workers need a major overhaul of our health care system and passage of the Employee Free Choice Act, legislation that would allow workers to bargain with employers for better wages, benefits and job security. Worker consumption is what drives our economy. In order to expand America’s purchasing power, we need to expand the paychecks of workers.

“Even with this new wage increase, millions of working Americans are struggling to make ends meet. By implementing the President’s bold reforms – from health care to the Employee Free Choice Act – we can put working families on a pathway out of poverty and back on the road to achieving the American Dream.”