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Wage floor rises 70 to $5.85
Many lawmakers and advocates for low-wage workers are celebrating the first increase in the federal minimum wage in a decade. Yet many acknowledge that raising it from $5.15 an hour to $5.85 will provide meager help for some of the lowest-paid workers.
The increase will not affect the minimum wage in the District of Columbia or Maryland, which both have higher rates than the federal rate. The District's minimum wage is $7, while Maryland's is $6.15.
Virginia's minimum wage will rise with the federal rate to $5.85 from $5.15.
"We already pay above that, so it won't be affecting us," said Peter Guy, manager at Merrifield Garden Center in Fairfax.
About 1.7 million people made $5.15 or less in 2006, according to the Labor Department's Bureau of Labor Statistics.
"The reality for a minimum-wage worker is that every penny makes a difference because low-wage workers make the choice between putting food on the table and paying for electricity or buying clothes for their children," said Beth Shulman, former vice president of the United Food and Commercial Workers Union.
"Saying that, it's clear going up to $5.85 is not enough to really make sure that people really can afford the things that all families need," said Ms. Shulman, author of "The Betrayal of Work: How Low-Wage Jobs Fail 30 Million Americans."
Minimum-wage workers will receive 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.
Currently, 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 at $13,690 and $17,170 for families of three.
"In the wealthiest country in the history of the world, it is an outrage that anyone who works full time would still wind up in poverty," said Rep. George Miller, California Democrat and chairman of the House Education and Labor Committee. "Everyone who puts in an honest day's work should receive a fair day's pay."
Even in the nearly two dozen states whose minimum wage is higher than the nationwide one, an increase in the federal minimum wage probably will have a ripple effect.
"It's a long overdue first step," said Cindia Cameron, the national organizing director of 9to5, the National Association of Working Women. Minimum-wage workers typically are young, single and female and are often black or Hispanic.
But employers who pay many of these low-wage workers say increasing the minimum wage means they have to raise the prices of the products, cut back on employees' hours or let some workers go.
"When you go into the grocery store now, you may be checking your own groceries, you may be bagging your own groceries," said Jill Jenkins, chief economist for the Employment Policies Institute. "All of these things are because of mandated wage hikes."
According to the National Restaurant Association, the last minimum-wage increase cost the restaurant industry more than 146,000 jobs, and restaurant owners put off plans to hire an additional 106,000 employees.
At $7.25 an hour, the most likely response from restaurants will be "increases in menu prices, elimination of some positions and reduction of staff hours to try and offset some of the increased labor costs," said Brendan Flanagan, the association's vice president of federal relations.
Others say the effect on the economy will be negligible.
A PNC Economic Outlook survey done in April showed that three out of four small- and middle-market business owners said raising the minimum wage would have little or no effect on their businesses.
"In a tighter labor market, they already raised wages to be competitive," said Stuart Hoffman, chief economist for PNC Financial Services Group.
c Adam Terese contributed to this report.
By Donald Lambro
Growth spikes are little more than trend-free anomalies
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