Happy Minimum Wage Increase Week!

More

This is an exciting week for the lowest wage earners in the U.S. and teenagers. On Friday, the federal minimum wage rate will jump from $6.55 to $7.25, about a $1,456 increase on an annual basis. Who will it affect? Strikingly few adult full-time workers.

This week's increase is the final bump from Congress' "Fair Minimum Wage Act of 2007," slipped into a bill to provide funding for U.S. troops and Katrina victims in May 2007. There's some debate about how much increasing minimum wage really affects unemployment. I have no intention of picking that up here. If you're interested, Megan wrote a lot about it last year. Given the state of the economy, however, I find it hard to believe that businesses will be cheering this week's increase.

First, let's have a little perspective on Congress's action back in 2007. Prior to the legislation, the minimum wage was a paltry $5.15 per hour. The act pushed it to $5.85 in July 2007, $6.55 per hour in July of 2008 and finally $7.25 this Friday. For those who like percentages, that was a 10% increase in 2007, 16% in 2008 and 11% in 2009 -- or a 41% increase pre-legislation to July 2009. If I were making 41% than I was in May 2007, I would be a very, very happy man. Of course, if that means I was making minimum wage, I would probably not be as happy.

So just who does this affect? The Bureau of Labor Statistics puts out a minimum wage report every year. 2008's report was released last March. According to that, about 286,000 individuals were making minimum wage in 2008, or 0.4% of the workforce. A few more than that will be affected, as the increase would also be a raise for anyone making between current federal minimum wage of $6.55 and $7.24 per hour. Unfortunately neither BLS nor the Census Bureau keeps track of wage distributions, so I could not determine exactly how many people will benefit. But it won't be many.

That BLS report also contains a few more interesting facts about the federal minimum wage earners:
- Approximately half were teenagers.
- Twice as many women as men make minimum wage.
- There was almost no racial discrimination, as all races were recipients of the minimum wage at virtually equal proportions.

The federal minimum wage will also only affect states that don't already have higher state minimum wages. I found this nifty map to explain each state's current rate (pre-Friday) relative to the federal minimum wage rate, over at the Department of Labor's website.

min wage map.PNG

What this chart doesn't show is that a few states fall between the new level and the old level. That means all states affected by Friday's change include: Alabama, Alaska, Arkansas, Delaware, Florida, Georgia, Idaho, Indiana, Kansas, Louisiana, Maryland, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Jersey, New York, North Carolina, North Dakota, Oklahoma, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Wisconsin and Wyoming. That's 30 states -- a little more than half. The other 20 states won't notice the change at all.

Because so few workers make less than the new federal minimum wage already, I don't believe it will cause much of a bump in unemployment -- even if you do believe that an increase in minimum wage generally results in lay-offs. With that said, I also doubt the increase will encourage businesses to hire new workers at the minimum wage.

Jump to comments
Presented by

Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.
Get Today's Top Stories in Your Inbox (preview)

What Is the Greatest Story Ever Told?

A panel of storytellers share their favorite tales, from the Bible to Charlotte's Web.


Elsewhere on the web

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register. blog comments powered by Disqus

Video

The Death of Film

You'll never hear the whirring sound of a projector again.

Video

How to Hunt With Poison Darts

A Borneo hunter explains one of his tribe's oldest customs: the art of the blowpipe

Video

A Delightful, Pixar-Inspired Cartoon

An action figure and his reluctant sidekick trek across a kitchen in search of treasure.

Video

I Am an Undocumented Immigrant

"I look like a typical young American."

Video

Why Did I Study Physics?

Using hand-drawn cartoons to explain an academic passion

Writers

Up
Down

More in Business

Just In