Minimum Wage Hike Kicks in Tuesday, July 24, 2007
Stephanie Armour, USA TODAY
COLUMN: Does wage hike affect your business? Steve Strauss takes a look
The last wage increase was a two-step increase in 1996 and 1997.
"The first step is incredibly modest, a 70-cent increase," says Liana Fox, an economic analyst at the Economic Policy Institute (EPI), a non-profit think tank that receives some funding from labor groups. "But by the third wage increase, 12.5 million workers will see wages go up. People see this as the right, moral thing to do."
Already, 30 states and the District of Columbia have minimum wages higher than the federal, so only 20 states will be affected by the first wage increase today. More than 70% of workers live in states where state minimum wages already trump the new federal wage increase, according to EPI.
In cases where an employee is subject to both the state and federal minimum wage laws, the employee is entitled to the higher of the two minimum wages.
Marc Freedman, director of labor law policy at the U.S. Chamber of Commerce, says the higher federal minimum wage could mean fewer hours for employees, fewer pay increases for other employees, benefits reductions, job losses and waning job creation.
"In particular, in the small-business sector where companies have restricted cash flow, any time you have to arbitrarily increase labor costs, they have to cover the costs in some ways," Freedman says. "They have to pay more and get nothing out of it."
Erik Kaiser, owner of Atlanta-based Grand Central Pizza, doesn't expect to see a huge financial impact because he already pays a starting rate of about $6.50 an hour. But he says he may be less likely to hire entry-level applicants once the minimum wage reaches $7.25.
"It will have limited impact on me," Kaiser says. "It's probably within the realm of inflation. I thought the minimum wage should go up every year according to the cost of living. I don't think it's going to be a big deal."
Catherine Fox-Simpson, a Dallas-based tax partner specializing in the retail industry, says businesses will be affected, but many have already anticipated increased costs. She says retailers may see some of the biggest impact.
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MINIMUM WAGES IN THE USA
The federal minimum wage rises by 70 cents on Tuesday to $5.85 an hour, the first of three scheduled increases that will raise the wage to $7.25 an hour in two years. Already, 30 states and the District of Columbia have minimum wages higher than the federal, so only 20 states will be affected by today's wage increase.
State Basic minimum rate, per hour
Alabama No minimum wage law
Alaska $7.15
Arizona $6.75
Arkansas $6.25
California $7.501
Colorado $6.85
Connecticut $7.65
Delaware $6.652
District of Columbia $7.00
Florida $6.67
Georgia $5.15
Hawaii $7.25
Idaho $5.15
Illinois $7.503
Indiana $5.15
Iowa $6.20
Kansas $2.65
Kentucky $5.15
Louisiana No minimum wage law
Maine $6.754
Maryland $6.15
Massachusetts $7.50
Michigan $7.155
Minnesota $6.156
Mississippi No minimum wage law
Missouri $6.50
Montana $6.15
Nebraska $5.15
Nevada $6.15
New Hampshire $5.15
New Jersey $7.15
New Mexico $5.15
New York $7.15
North Carolina $6.15
North Dakota $5.15
Ohio $6.85
Oklahoma $5.15
Oregon $7.80
Pennsylvania $6.25
Rhode Island $7.40
South Carolina No minimum wage law
South Dakota $5.15
Tennessee No minimum wage law
Texas $5.15
Utah $5.15
Vermont $7.53
Virginia $5.15
Washington $7.93
West Virginia $6.557
Wisconsin $6.50
Wyoming $5.15
1= $8 as of Jan. 1, 2008; 2= $7.15 as of Jan. 1, 2008; 3= $7.75 as of July 1, 2008, $8 as of July 1, 2009, $8.25 as of July 1, 2010; 4= $7 as of Oct. 1; 5= $7.40 as of July 1, 2008; 6= $5.25 for small employer; 7= $7.25 as of July 1, 2008
Source: Department of Labor