July 27, 2007

For 5.3 million workers, first minimum wage boost in 10 years takes effect

By Stephanie M. Peters
Scripps Howard Foundation Wire

WASHINGTON — Irene Cole would like to buy her sons steak for a change, but at more than $11 a package in her grocery store, it’s an extravagance her budget just doesn’t allow.

Instead, most nights the boys eat chicken.

“It’s all I can afford,” said Cole, 36, of Atlanta a single mother to two boys, 15 and 16.

In her next paycheck, however, Cole - who earns the minimum wage - will find an extra $28, thanks to the first of three scheduled 70-cent bumps to the minimum wage that went into effect Tuesday. It raised hourly wages for the country’s lowest paid workers from $5.15 to $5.85.

It is the first increase since Sept. 1, 1997, and the first of three incremental increases that will lift the minimum wage to $7.25 in July 2009. By then, the minimum wage increases will directly affect 5.3 million workers, and indirectly raise the wages of an estimated 7.2 million who earn slightly more, according to the Economic Policy Institute.

Thirty-nine states already have state minimum wages above the national rate. But fewer states will be paying above the federal rate by 2009, when 35 states are expected to require the federal minimum wage.

“This first step is incredibly modest,” said Liana Fox, an economic analyst for EPI, a Washington economic think tank. “I think it still needs improvement ... the purchasing power of the minimum wage is at a 50-year low.”

Modest it may be, but Cole will use the additional pay to chip away at bills, she said, and in particular a lighting bill that recently jumped upward of $90 a month. She works a 40-hour week for Dependable Staffing Solutions, a temporary employment agency that often assigns her maintenance work in the Georgia Dome.

Cole and Baltimore resident Valerie Henry, who makes $5.85 cleaning the bathrooms at Camden Yards, joined labor union leaders and Democratic members of Congress at a rally Tuesday to celebrate the increase.

“For the work that we do, we are paid at a poverty level,” said Henry, 55, who balances three part-time jobs to manage her household bills.

Democratic leaders, aware that even at $7.25 an hour workers will still live below the poverty level, vowed to fight to push the minimum wage even higher.

Sens. Ted Kennedy, D-Mass., and George Miller, D-Calif., will soon introduce legislation proposing a $9.50 federal wage, Kennedy said. $9.50 is more in line with what organizations such as the Association of Community Organizations for Reform Now, or ACORN, consider a “living wage” - or a wage sufficient to meet the basic needs of a worker living a modest life.

“We still have a ways to go,” said ACORN President Maude Hurd. “At $7.25, workers still struggle to meet basic needs.”

Small businesses are already balking at the higher wages they must now pay seasonal, part-time and service workers.

“Mandating a minimum wage certainly takes out some of that free-market belief that our members have,” said Stephanie Cathcart, spokeswoman for the National Federation of Independent Business. The advocacy organization represents small and independent businesses in all 50 states and the District of Columbia, 80 percent of which employ 10 or fewer workers.

For some, that total $2.10 wage increase they will feel by 2009 could lead to reduced hours or job cuts, and prevent new hires, Cathcart said.

A study conducted by the EPI after the last minimum wage increase didn’t find the economy had been negatively affected, Fox said.

“What we do see is low wage workers have more money and low wage workers spend almost all of their money, if not more,” Fox said. “And they spend it in the local economy, on day care, groceries, rent.”

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