Dec. 24, 2004--Several states are raising the minimum wage in the New Year, raising the ire of some small-business advocates who argue that the wage increases will hurt hiring rates and, thus, the economy. But labor advocates say the wage increases will fuel consumer spending and give a boost to the economy.
The increases are notably higher than the federal standard of $5.15 an hour. Illinois will raise its minimum wage to $6.50 an hour; Oregon, to $7.25, Vermont, to $7; and Washington, to $7.35, the highest minimum wage in the nation. By the end of 2005, Florida will also raise its minimum, to $6.15, and Maine, to $6.50. Nevada and New York also recently approved state minimum wages, of $6.15 and $7.15, respectively.
Several states raising the minimum are also tying it to inflation, potentially raising minimums every year. Had the federal minimum wage been linked to inflation since 1968, according to the Brennan Center for Justice, an NYU Law School initiative that helped draft the Florida minimum-wage initiative, it would now be worth about $8.70 -- much higher than any state's minimum.
These recent approvals push the issue beyond a Democrat-Republican argument. Many blue states, including California, Connecticut, Delaware, DC, Hawaii, Massachusetts, Maine, and Rhode Island, have already raised their minimum wages. Now, so have red states Alaska, Nevada, and Florida (the latter by a resounding 72 percent vote). Many states, regardless of party leanings, are making up their own minds instead of waiting for the federal government -- which has left the minimum wage unchanged since 1997, the second-longest period of stagnation since the minimum wage was instituted.
A full-time worker who gets the $5.15 an hour makes about $10,000 a year -- well below the poverty line for a married couple or family. And there isn't a single state in the country where workers on the federal minimum wage can afford rent and utilities on a one-bedroom apartment, according to a Dec. 20 study by the National Low Income Housing Coalition noted.
Still, small-business advocates like the NFIB oppose the increases, saying that while big businesses can afford the hikes, small businesses can't cope. Businesses will cut low-wage jobs, unemployment will rise, and low-wage workers will be hurt, not helped, by the increases, they say. Still, the trend of states increasing minimum wages seems likely to become more widespread.