Minimum Wage Set to Rise in Eight States
As reported by Forbes.com.
While economists and policy makers on the left and the right continue to disagree about the impact of a higher minimum wage on jobs and the economy, eight states will be putting into effect minimum wage hikes as of January 1, boosting the incomes of some 1.4 million low-wage workers in Arizona, Colorado, Florida, Montana, Ohio, Oregon, Vermont and Washington. The minimum wage in those states will rise between 28 and 37 cents an hour, adding between $582 and $770 a year to a full-time worker’s compensation, according to the National Employment Law Project, a group that supports a higher minimum wage. Those eight states all have laws that require the minimum wage to keep pace with inflation. Nevada ($8.25) also indexes its minimum wage but the hike only takes effect in July.
On the left, supporters of a higher minimum wage believe that more money in workers’ pockets means more consumer spending and a boost in demand. On the right, critics point to studies showing that a hike in minimum wage can hurt GDP growth and reduce job opportunities for the least skilled workers.
There is plenty of data supporting both positions, which makes it tough to judge which side has the upper hand. Example: a study by three academic economists that came out in late 2010, found that raising the minimum wage did not dampen job creation. The economists looked at data in counties that straddled state lines, where the states had differing wage policies, over a nearly 17-year period. They focused on restaurant workers but looked at other low-wage employees as well. The finding: “no adverse employment effects.” Meantime, a comprehensive two-decade literature review by a University of California at Irvine economist and a member of the Federal Reserve Board, published in 2007, showed that a hike in minimum wage hurt the job chances of low-wage workers. A separate 2010 paper, prepared by economist Joseph Sabia for the Employment Policies Institute, a conservative think tank, found that a higher minimum wage drove down GDP in low-skilled industries.
Eighteen states and the District of Columbia have minimum wage rates above the federal level of $7.25 an hour. A full-time worker making minimum wage earns just $15,000 a year. (The 2010 poverty threshold set by the Census Bureau was an income of $11,139 for a single person).
One more intriguing change: The Wall Street Journal has a story today about the hike in the minimum wage taking place in San Francisco as of January 1. San Francisco will be the first spot in the U.S. to have a minimum wage above $10 an hour, at $10.24. Several other cities, including Albuquerque ($7.50) and Santa Fe ($9.92), N.M., also set their own minimum wages. Anecdotally, the Journal reports that S.F. businesses don’t plan to cut back on employees, but may pass the added costs of the higher wages on to consumers.
Here is a list of states hiking the minimum wage, with the amount of the increase and the new wage as of January 1, 2012:
Arizona : .30, $7.65
Colorado: .28, $7.64
Florida: .36, $7.67
Montana: 30, $7.65
Ohio: .30, $7.70
Oregon: .30, $8.80
Washington: .37, $9.04
Vermont: .31, $8.46
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