Today the federal minimum wage increased 70 cents to $6.55, as the second phase of a series of moves meant to bring the minimum wage up over a three year period. The "raise" will affect roughly 1.7 million workers or 2.3% of hourly workers, which means that collectively the cost of employing all minimum wage workers for one hour jumped $1.19 million today.
Despite the increase, the new rate is still below the inflation-adjusted 1997 level of $7.02, and far below the inflation-adjusted level of $10.06 from 40 years ago, according to a Labor Department inflation calculator. And it obviously still leaves many families well under the poverty line.
You'd think that getting a 12% raise during poor economic times would be a great help for 850,000 people over 25 who are making minimum wage. Unfortunately the increase is often quickly passed to the items these same workers need to buy; including food and gasoline. Smaller Businesses will also feel the pinch as they struggle to cope with higher wages and customers who are sick of seeing prices go up time and time again.
Minimum wage earners won't be the only ones affected by the increased costs associated with paying a higher wage. Three-fifths of those earning at or below the minimum wage work in the leisure industry, the highest proportion of any industry! It is only a matter of time before these wage increases take an effect on the cost going to hotels, bars and restaurants, giving consumers even more incentive to take a staycation.
Five years ago, I would have been ecstatic to hear about a minimum wage increase; today as I hear the news I ponder the cuts that will have to be made to fill this large wage increase for the many student workers at my University and the changes that will take place for my many friends who own small businesses.The jury is still out on a minimum wage but I question the logic of mandating a 12% raise during a period of economic strife, especially when I only get 1% this year!
It's minimum wage increase day!