Minimum Wage Increase Takes Effect Today
Today, the federal minimum wage increases to $5.85/hour. The increase comes after nearly ten years during which the minimum wage remained fixed at $5.15/hour, and includes two automatic increases on July 24, 2008 and July 24, 2009. Two years from now, the nation's lowest paid workers will be earning $7.25/hour. The U.S. Department of Labor offers a complete history of minimum wage increases and amendments since 1938 here: History of Federal Minimum Wage Rates
It's good to finally see some movement in the federal minimum wage, which began at $0.25/hour in 1938, but an increase of $0.70 after a decade of stagnation isn't likely to be life-altering for many workers. In fact, the number of workers impacted at all will be limited, since approximately half of U.S. states already have state minimum wage statutes which require higher rates.
For the full-time, minimum wage employee, the increase will mean an additional $28.00 per week, or $120.40 in the average 4.3 week month. That's before taxes, of course.
The Economic Policy Institute last year provided data suggesting that the average 2005 worker would need $6.27/hour to achieve a standard of living comparable to that provided by $5.15/hour in 1997. American workers will finally surpass that level in July of 2008. Of course, the cost of living isn't likely to stand still and wait for them.
This year's increase will nudge a family of four with two parents working full time at minimum wage just above the federal poverty level. Even if we accept the current federal poverty guidelines as a realistic measure--a questionable assumption at best--it's difficult to applaud a minimum wage that keeps a family with two parents both working full time poised on the sharp edge of the poverty line.
