Minimum wage boost first in 10 years
 

Minimum wage boost first in 10 years

Wage will rise in three steps, from $5.15 to $7.25 an hour, but advocates and critics still disagree on the benefits to low-wage workers.

By Chris Zappone, CNNMoney.com staff writer
July 23 2007: 5:29 PM EDT


NEW YORK (CNNMoney.com) -- The first minimum wage increase in 10 years takes effect Tuesday, to $5.85 from $5.15 an hour, with two more steps over the next two years taking base pay for millions of workers to $7.25.

But the increase in the federal minimum wage - signed into law in May after a lengthy battle between Democrats in Congress and President Bush and Senate Republicans - still sparks heated debate.


The Fair Minimum Wage Act of 2007 raises the wage in the 18 states that haven't already boosted their minimum wage. The District of Columbia has also raised its minimum wage.

About 13 million workers, or 10 percent of the nation's work force, will benefit from an increase in the minimum wage, the labor-backed Economic Policy Institute said. Of those 13 million, 5.6 million would be directly affected, while 7.4 million low-wage workers will see the spillover effect on their wages.

Wage-hike advocates hailed the increase.

"Yes, I'm glad it's back up, but it's too late now for all sorts of working poor who couldn't pay the rent, or had to cut back groceries for the kids," said author and labor advocate Thomas Geoghegan. "It's a disgrace that we let the minimum wage drop, in real terms, for so long."

The EPI's Liana Fox conceded that the increase doesn't affect 90 percent of the nation's workers but said it was important because the minimum wage is at a 52-year low when adjusted for inflation.

"It's a basic wage floor," said Fox, who noted that other costs have risen since the federal wage was last increased in 1997. The minimum wage was first enacted in 1938.

Steven Davis, of the Chicago School of Business, who is also a visiting scholar at the right-leaning American Enterprise Institute, said increases in the minimum wage can cause employers to respond by looking to reduce labor costs.

"If you subsidize employers to use low-skill workers, they'll seek to use more," he said.

Davis suggests reducing the payroll tax on earnings for both workers and employers.

The "biggest tax paid by low-wage workers is payroll tax not income," said Davis, who noted that the Earned Income Tax Credit is designed to level the playing field for low-wage workers.

"I view that program as a better way of achieving the goal" of easing the burden on low-wage workers.

Fox, however, said the increase in the minimum wage was necessary. "We know there are situations where the free market failed and the low-wage labor market is one of those situations," she said.

"You may be able to get someone to work for 10 cents an hour, but we've decided as a society that that's not a desirable situation," she said.

Geoghegan is more blunt: A raised minimum wage "means, if people live better, there is less disorder and public-squalor blowback. Instead with the drop [in low-end wages], we had a very slow motion Katrina type disaster, a wreckage that the media can't video so we can see it."

I'm not really a big bible person...but I believe Jesus said it best "You will always have the poor among you"

No matter how much they raise the minimum wage the price of goods will rise so the manufacturers can recoup there money. Pretty pointless if you ask me.:duh3:

It is very interesting from my perspective looking at the land of the free and seeing this BS about minimum wage.

Regardless of colour creed or background shouldn't you (the employee) who is working be able to feed and house yourself and your family? We see it here as well there as many as 1 in 4 working poor. They make ok money (most above the min. wage mark) but are still living in their cars etc. simply because rent is either impossible to find or too much per month.

I have never been a fan of hand outs but hand ups are quite alright with me. Then again, what do I know. Get a trade or an education and get a job. For someone to claim that we'll be looking to reduce labour costs is simply BS, with more and more baby boomers retiring there just simply won't be people there to do the work that is needed to keep the cities clean, food on the tables and houses or housing capable of doing what it is supposed to.

Of course that might also have to do with the must have generation (or whatever they are called now). I must have an iPOD, cell phone, laptop, guess jeans, internet, call display, sat. TV and so on the list goes. Then there are those of us that have that stuff but we worked for it. I sorry there dear but shit don't grow on trees, it comes from your arse. Learn to clean it up and you'll make a mint!

Sorry for the rant.

I honestly dont have a clue how anybody could make it on thise wages,,,,,,,there is a man and his wife here in town that both make min wage working in a gs station and there are very happy...........I know money dont buy happiness but it sure helps yaknow

I for one am against it unless they are going to do away with the earned income credit BS. It really burns my rear that because I make what I do that I have to pay at the end of the year, (And mind you I only have some college education from a Community College, even though it has nothing to do with what I do for a living) but my own sister who dropped out of school and has 3 kids living with a lazy good for nothing boyfriend who won't work and she only makes min. wage and they have no trailer payment, get 5 to 7k back every year. They get food stamps and medicare and wic. I tell her every year that I hope she enjoys the money that I worked for and couldn't get back.

It will over all make the prices of everything go up. Those jobs are low paying because it doesn't take an educated person to do it. To me it is just a hand out. Here you go it isn't your fault that you didn't get an education, even though you are living off of the tax payers let's just give you a little more.

Sorry if this offends anyone, that was not my intention. It is only my thoughts on the subject.

i don't see it as a minimum wage increase.... i see it as i'm taking a pay decrease. i paid for myself to go through school. 2 fulltime jobs and 1 part time job at one point. everything i have i worked for. i believe that there should be an across the board pay increase instead of those that are in the lower bracket. i know people that have worked at the hospital i worked at for years. they work in housekeepeing but they have been there for 5+ years and are making 6.50 an hour. so now you are saying that they are making the same as a new entry employee when it gets to 7.25 an hour..... it makes no sence to me.....

Thats the same way I see it. Or a pay decrease for me. I am already paying for these people, so you want me to pay more for these people, and me not make any more money. That my friend is BS. If they get a $2.15 raise, I want one too. But wait, then we will be right back where we were. The numbers only got bigger.

well yeah but you can subsidize your income as a gorilla prostitute.

anyway, i see this as enablement. much like welfare and food stamps raising the minimum wage only enables these people to feed off the bottom any longer. here's an idea, if a job isn't paying enough for you go find one that does. even if you have to sacrifice some spare time for school time. the whole minimum wage idea is a joke created by a bunch of bleeding hearts. if a company is only paying people $3.00 an hour they won't have employees for very long, or atleast not good ones. you think they'll stay in business very long unless they up the pay? this government, for some reason, feels the need to interfere with the natural give and take of our system and when they do, the honest, hard working people ALWAYS pay the price. this will come out of your wallet in the future in some manner, no matter who you are.

Yeah Logan, what are you complaining about....not EVERYONE can do that! lol
Well said...

Call it what you want. Like I said I think hand outs are wrong. Hand up's are ok. You make the choice - don't blame society for your 40oz habit or you crack smokin' ways. I ain't up wid dat, homey... word...

Anyway, I don't see it as they get a raise we get a raise. The real problem is corporate giants like Wally world. Think of the number of jobs they take from the small towns and get a large group of people in there just to turn a buck. Did you know that they have a 50% turn over? Ouch. Maybe if they paid a bit better things wouldn't be so poor. Then again that's part of the cycle because we as consumers always want a deal and we always want something for free or whatever. The small print would say at what cost?