Kasey Wehrum

West Virginia Raises Minimum Wage

More than 20 states have taken up similar bills, drawing ire among some small-business owners.

 

March 15, 2006--As part of an ongoing trend across the nation, the West Virginia legislature has passed a bill raising the state's minimum wage -- and raising concerns among small-business owners as well.

The law raises the current minimum wage to $5.85 by June 2007, and again to $7.25 by June 2008. Much debate was focused on the limited scope of the original bill, which opponents said would only affect around 2,000 of West Virginia's 20,000 minimum-wage workers. Passed on March 11, the law only applies to employers with six or more employees with at least $500,000 in annual gross income. The new rate also doesn't apply to any business involved in interstate commerce.

Within the past year, more than 20 states have taken up bills to increase their minimum wages, while Maryland and Rhode Island have already passed such measures.

Some small-business owners, both in West Virginia and nationwide, contend that such increases hurt their bottom lines, and could actually lead to higher unemployment if companies are forced to lay off workers to cover the higher wages.

"We are definitely seeing more activity in the states," said Jeanne Mejeur, research manager for the National Conference of State Legislatures. "I think the reason for that is mainly because there hasn't been any federal activity since 1997. Legislatures are trying to balance the needs of low-income workers and their families along with the needs of business owners. In some cases, they will take the issue right to the voters in the form of a ballot initiative."

Currently, 18 states and the District of Columbia have approved a minimum wage higher than the federal rate of $5.15 an hour. Twenty-four states maintain the federal rate, two states set a lower floor for minimum wage, and six states have no minimum wage laws.

Patrick Lyden, manager of legislative affairs for the National Federation of Independent Business, a 600,000-member lobbying group based in Washington, D.C., said that the push to raise the minimum wage will actually have a negative effect on the workers these bills hope to help. "What we've seen from a small-business perspective is that for businesses that have a very small bottom line, employers usually end up cutting the one or two employees who they are paying the least. Unfortunately, it is a matter of supply and demand," he said.

Lyden says that minimum wage should viewed as a starting wage which gives employers the ability to take a chance on unskilled, untrained workers. "Once they have gained experience and have shown they can produce as employees, employers will compensate them accordingly. Statistics show that 65% of minimum-wage workers receive a raise within their first 12 months of employment as their skills increase."

Staff writer Kasey Wehrum has written for Inc. magazine on subjects ranging from the businesses behind professional bull riding to gadget inventor and father of the infomercial, Ron Popeil. His work has appeared in the New York Times, Worth, Budget Travel, and on MSNBC.com. He lives in New York City.