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Federal Minimum Wage Increase

April 3rd, 2008 Posted by Amelia

The federal minimum wage will increase 70 cents, from $5.85 per hour to $6.55 per hour on July 24, 2008. This is the second of a three-tiered minimum wage increase signed into law by President Bush on May 24, 2007.

Twelve states including Texas, Indiana, Idaho, Maryland, North Carolina, North Dakota, Oklahoma, South Dakota, Virginia, Montana, Nebraska and Utah will increase the state minimum wage on July 24, 2008 when the new federal rate of $6.55 per hour is introduced. Most of these states have legislation that ties the state minimum wage to the federal rate.

In Ohio, the minimum wage operates on a two-tier system. The state minimum wage for employers with an annual revenue of more than $255,000 is currently $7.00 per hour. For employers with annual revenue of less than $255,000, the minimum wage will increase from $5.85 per hour to $6.55 per hour on July 24, 2008.

Some areas, such as Washington D.C., peg the minimum wage to a set amount above the federal minimum wage. In D.C., the minimum wage is $1.00 per hour more than the federal rate, so the minimum wage will increase to $7.55 per hour in July.

In Georgia and Wyoming, the state minimum wage remains at $5.15 per hour, the same as the 2006 federal minimum wage. In those states, the minimum rate can only be increased by passing new legislation.

Four states will increase the minimum wage on July 1, 2008. These include Illinois where the state rate goes from $7.50 to $7.75 per hour. In Michigan, the state rate will increase from $7.15 to $7.40 on July 1, while in West Virginia the rate increases by 70 cents, from $6.55 to $7.25 per hour.

At least 14 states increased the state minimum wage on January 1, 2008. This includes California, Oregon, Washington, Missouri, Montana, Delaware, Iowa, Kentucky, New Mexico, Massachusetts, Vermont, Colorado, and Arizona.

Other states including Washington, Oregon, Delaware, Iowa, Kentucky, New Mexico, Vermont, Colorado, Arizona, Missouri and Montana have long had a cost-of-living increase in the state minimum wage.

Minimum wage increases remain one of the top stories in the Human Resources field in 2008, as they were in 2007.

On May 24, 2007 President Bush signed the Fair Minimum Wage Act of 2007 into law. The statute increases the federal minimum wage by a total of $2.10 over a three-year period, from $5.15 per hour in 2006 to $7.25 in 2009. Under this law, the federal minimum wage increases by 70 cents each year on July 24, for three years.

This was the first increase to the federal minimum wage in more than a decade. The total increase for a full-time minimum wage earner amounts to $84 per week, or $4,368 per year. During the past 10 years, while the minimum wage has remained at $5.15 per hour, the average member of Congress has voted himself or herself raises increasing the annual salary by more than $31,600.

Supporters of the new federal minimum wage point out that at $5.15, the 2006 minimum wage had less purchasing power than the $1.60 minimum wage did in 1968. In fact, the current minimum wage would have to rise to $9.12, in order to have the same purchasing power as in the 1960’s. Critics of the higher rate argue that it will reduce employment opportunities for unskilled and entry-level workers.

The first increase to the federal minimum wage under the current law was on July 24, 2007 when the hourly rate went from $5.15 per hour to $5.85 per hour.

On July 24, 2008 the federal minimum wage will increase 70 cents, from $5.85 per hour to $6.55 per hour.