Minimum Wage Set to Rise in Seven States
According to Wall Street Journal reporting, hundreds of thousands of low-wage workers have a good reason to celebrate the New Year thanks to a minimum wage increase in seven states. The increase will affect roughly 647,000 workers, according to the National Employment Law Project, and will go up between nine and 12 cents in Arizona, Colorado, Montana, Ohio, Oregon, Vermont and Washington state.
Following the gains, 17 states and the District of Columbia will have minimum wages above the federal level of $7.25 per hour. While the states’ increases aren’t huge, they are likely to be welcome. Increasing these low-paid workers’ compensation will improve morale and productivity.
The minimum wage is rising 10 cents to $7.35 in Arizona, 12 cents to $7.36 in Colorado, 10 cents to $7.35 in Montana, 10 cents to $7.40 in Ohio, 10 cents to $8.50 in Oregon, nine cents to $8.15 in Vermont, and 12 cents to $8.67 in Washington state.
About 48% of those receiving the federal minimum wage are at least 25 years old, while about 52% are between 16 and 24, according to the U.S. Labor Department.
The federal minimum wage rose to $7.25 per hour in July 2009, up from $6.55 in July 2008, and $5.85 in July 2007. In 1980, the prevailing federal minimum wage was $3.10 — a level that would have the same buying power as $8.23 this year, according to the Labor Department’s CPI inflation calculator. The federal minimum wage pays a full-time earner about $15,000 per year.
Stagnant future for overall wages
Overall, wages may not gain anytime soon, experts say. This is due to the 9.8% unemployment rate and the rality that there is little pressure for employers to increase wages to attract qualified candidates for open positions. Reportidly, there are more than four potential job seekers for each open position.
However, low wages are turning off some would-be employees. Andy Allen, a partner in a Texas-based security-services provider, said his firm recently offered a spot to a man who has been unemployed since 2008, only to be rebuffed.
“He had been a manager at Walmart. We offered him a job for $11 an hour. He accepted, and then the next morning, when he was supposed to show up for orientation, he didn’t show up. He said he just couldn’t imagine taking this kind of pay cut.”
Allen added: “People are accustomed to making a higher wage. We are seeing people walk in the door and applying, [but some are] turning down the job because they feel it is beneath them.”
Wages have not kept pace with productivity in recent years. Median weekly earnings, adjusted for inflation, for full-time employees reached $339 in the third quarter. That level is up 2% from $331 in the third quarter of 2000. Over the same time period, a commonly used gauge of productivity gained 29%.
Workers’ bargaining position is weak, said Gary Burtless, an economist at the Brookings Institution. Going forward, there may not be a substantial change in wages.
“Of all revenue to America-based companies, more is going to the corporate bottom line than is going to the paychecks of employees,” Burtless said.
Read this full report here.
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