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More Minimum Wage Changes in 2008

January 1st, 2008 Posted by Amelia

There are a number of minimum wage changes that will take place in 2008, which employers should be aware of.

While fourteen states increased their minimum wage on January 1, 2008, there are additional minimum wage changes on the horizon.

Five states will increase the minimum wage on July 1, 2008. These include Illinois, where the state rate increases by 25 cents from $7.50 to $7.75 per hour. In Michigan, the minimum wage will increase by 25 cents from $7.15 to $7.40 per hour.

West Virginia and Kentucky both have minimum wage increases of 70 cents slated for July 1, 2008. On that date, the West Virginia minimum wage will increase from $6.55 per hour to $7.25, while the Kentucky minimum wage will increase from $5.85 to $6.55 per hour.

The largest minimum wage increase for July 1 is in Pennsylvania, where the state rate will jump 90 cents, from $6.25 to $7.15.

The federal minimum wage will increase on July 24, 2008 by 70 cents, from $5.85 to $6.55 per hour. This is the second step of a three-tiered increase under the Fair Minimum Wage Act of 2007, passed during the first 100 days of the Democratic majority in Congress. Under that act, the federal minimum wage was increased for the first time in more than a decade. The law provides for the federal minimum wage to increase from $5.15 to $7.25 per hour, in 3 increments of 70 cents each. The first increase occurred on July 24, 2007, 60 days after President Bush signed the bill into law. The third and final increase will occur on July 24, 2009, when the federal minimum wage increases from $6.55 to $7.25 per hour.

A number of states will increase the state minimum wage on July 24, 2008 as well. That’s because 9 states had tied the state minimum wage to the federal rate. Those states are Maryland, North Carolina, North Dakota, Oklahoma, Texas, Utah, Virginia, Indiana and South Dakota. In all of those states, the minimum wage will increase from $5.85 to $6.55 on July 24, 2008.

The minimum wage in Washington, D.C. will increase on July 24, 2008 as well. That’s because a law in the district mandates that the minimum wage be at least $1.00 above the federal minimum wage. On that date, the D.C. minimum wage will increase by 50 cents from $7.00 to $7.55 per hour.

Two states that do not link the state minimum wage to the federal rate are Wyoming and Georgia. In those states, the minimum wage will remain unchanged at $5.15 per hour. However, most workers in those states are covered by federal law, and therefore entitled to the higher federal minimum wage.

On January 1, 2008, fourteen states increased the minimum wage. Several of these did so by implementing a new statute. In Delaware, the state minimum wage increased by 50 cents from $6.65 per hour to $7.15 per hour.

The smallest increase of any state is in Montana, where the state minimum wage increases by 10 cents from $6.15 to $6.25.

The largest state minimum wage increase of the new year was in New Mexico, where the state rate jumped by $1.35 in one day, from $5.15 to $6.15 per hour. However, the biggest overall increase was in Iowa, where the January 1 increase of $1.05, from $6.20 to $7.25 was the second in less than 9 months. Coupled with the earlier increase, employers in Iowa face a rise of $2.10 in the state minimum wage in less than one year.

Several states had annual cost-of-living increases to the minimum wage on the first day of 2008, as well. Many of these increases are based on the Consumer Price Index or CPI, a measure of inflation. Usually the CPI for urban and clerical workers, regionally or nationwide, is used to figure the annual increase. Under this method, Oregon, Washington, Vermont, Colorado, Missouri, Montana, Ohio, Florida and other states have increases averaging 12 to 15 cents.

After this series of changes, the highest minimum wage in the nation is still in Washington state, where the rate went from $7.95 to $8.07 per hour under an annual cost-of-living raise. California and Massachusetts share the #2 spot, with statutory increases from $7.50 to $8.00 per hour. Oregon’s minimum wage drops from second in the nation to fourth place, with a cost-of-living adjustment of 15 cents from $7.80 to $7.95.

The federal minimum wage is slated to change in July, 2008. It will increase by 70 cents from $5.85 to $6.55 per hour.

In general, the federal minimum wage applies to workers at companies that have revenue exceeding $500,000 per year, or that engage in interstate commerce. In addition, a particular employee may be entitled to the federal minimum wage, if he or she is engaged in interstate commerce. A shipping clerk who regularly sent packages out of state, or a receptionist who answered calls from out of state, would be examples of individual employees engaged in interstate commerce.

Under federal law, when the state and federal minimum wages are different, and both laws apply, workers are entitled to whichever wage offers the greatest benefit. So, for example, in Washington state, workers covered under the federal minimum wage are still entitled to the state wage of $8.07 per hour, rather than the federal rate of $5.85. However, in Georgia, any worker covered under the federal minimum wage is entitled to the federal rate of $5.85 per hour, rather than the state rate of $5.15 per hour.

Every employer will need to update his or her federal minimum wage posters in July 2008. In addition, employers in most states will need to update their state minimum wage posters, either in January or later in the year. In some cases, employers will need to update their posters twice. Current labor law posters are available at www.laborlawcenter.com.