Washington to be first state to top $9 minimum wage

CHICAGO Sat Dec 31, 2011 12:57pm EST

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CHICAGO (Reuters) - Washington will be the first state to require a minimum wage of more than $9 an hour when it joins seven other states on Sunday in automatically adjusting salaries to keep up with inflation.

More than a million low-wage U.S. workers will see their hourly pay go up after the adjustment but many will remain mired in the ranks of the working poor in a country where nearly one-in-six live below the poverty line, according to U.S. Census Bureau statistics.

Based on a typical 2,000-hour work year, the wage increases that take effect on New Year's Day in Arizona, Colorado, Florida, Montana, Ohio, Oregon, Vermont and Washington translate into annual salaries for minimum-wage workers of between $15,280 and $18,080.

Nearly one-fifth of the workers affected by the increases live in Washington, where the adjustment will take the minimum wage from $8.67 to $9.04, according to Economic Policy Institute data. That will make Washington the first state in the country with a minimum wage above $9.

"Some people look at these numbers and say, 'How much of a difference can an extra 37 cents an hour make?'" said Doug Hall, director of the Economic Policy Institute's Economic Analysis and Research Network.

"But the truth is that for folks who are making that small an amount of money, it makes a lot of difference."

In Florida, the 36-cent-per-hour increase adds up to an extra $720 a year in pretax pay, much of which can stay in workers' pockets if they also claim the earned income tax credit, Hall said.

The federal minimum wage last increased in July 2009 to $7.25 per hour, the final one of three increases begun in 2007 when it was $5.15.

Eighteen states and the District of Columbia have wages rates above the federal minimum, 23 match it and the other nine set rates below the federal minimum or do not have a minimum wage, according to the U.S. Department of Labor.

Ten states tie their minimum wage rates to the consumer price index, the eight raising their rates on January 1, Missouri, which has opted for no change in 2012 and Nevada, which waits until mid year to make changes.

In 2010, at least 6 percent of the nearly 73 million American workers over age 16 who were paid at hourly rates earned either the federal minimum wage of $7.25 or less, according to the Labor Department's Bureau of Labor Statistics.

Proponents of the minimum wage increases said they preserve the buying power of some of the country's most vulnerable workers.

According to an analysis by the Economic Policy Institute, a liberal research group based in Washington, more than half of the workers who will benefit from the minimum wage increase in the eight states will be women, some of them raising kids on their own.

Even with the increases, a family of three or four relying on a single earner for income in the eight states will still find itself below the poverty line. That threshold was $18,530 for a family of three and $22,350 for a family of four, according to the U.S. Department of Health and Human Services.

"Some folks will still be short of what they really need to actually get through the month," Hall said.

Critics of the minimum wage such as the Employment Policies Institute, a conservative think tank, said mandated base wages are partly to blame for the plight of the working poor, discouraging job creation, especially for positions that do not require much experience or expertise.

"Higher minimum wages reduce demand for less skilled employees," said Michael Saltsman, a research fellow at the Employment Policies Institute.

Saltsman said that in Washington state, restaurants have fewer bussers per table than the national average, according to the Washington Restaurant Association. The nation's highest minimum wage, plus a provision barring businesses from applying tip income to the minimum wage, means restaurants there probably will cut back even more.

"It's just too expensive to keep them on the floor," Saltsman said.

(Reporting by James B. Kelleher; Editing by David Bailey and Greg McCune)

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Comments (3)
RikkiDoxx wrote:
And how soon will layoff’s begin in order for small companies to pay the extra amount?

Dec 31, 2011 1:26pm EST  --  Report as abuse
jroliver wrote:
The Republicans say do away with minimun wage and I agree this money should go to the job creaters. I mean the 1% job c reaters have created millions of jobs in China and Mexico

Dec 31, 2011 4:03pm EST  --  Report as abuse
Ralphooo wrote:
At $9/hour a 40-hour week would be worth $360 before taxes, or $1,548 per month. Maybe the take-home will be $1,300 per month. Meanwhile rent and utilities come to probably $700 per month. The phone bill will be at least $75 (no land line). Then you are left with about $17 per day for food, clothing, transportation and emergencies. That might be barely adequate if you are a small person with a small appetite, and you like rice and beans, and work within walking distance of your home, and don’t care too much about your appearance, and you never go out or watch a DVD, never have any health problem and have no children.

Otherwise that sky-high minimum wage will not be nearly enough to live on.

In the year I was ten years old, that is 1961, a small family could survive on the minimum wage earnings of one person. People read books or watched something on 3 channels of TV, pulled in (fuzzily) by a rabbit-ear antenna and displayed on a 15 inch black and white screen. There was no such thing as a DVD, a computer game, a cell phone, a fixed up heart or a pair of breast implants.

Is it any wonder a lot of people feel cheated these days? Life is more complicated than ever before, and they can’t even afford to live it.

Dec 31, 2011 5:34pm EST  --  Report as abuse
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