Employers should be prepared for even more minimum wage changes in 2008. Illinois, Michigan, West Virginia and Kentucky each have minimum wage changes on the books that will take effect on July 1, 2008.
The Illinois minimum wage increases from $7.50 to $7.75 on July 1, 2008. This 25 cent increase is the most recent in a series of minimum wage increases under Illinois Governor Rod Blagojevich. Another increase is scheduled for July 1, 2009, which will bring the Illinois minimum wage to $8.00 per hour.
The Michigan minimum wage will increase by 25 cents, from $7.15 to $7.40 per hour on July 1, 2008. Michigan has also seen a series of minimum wage increases in recent years. The Michigan increase is controversial, because the state has struggled with higher unemployment for the past two years. Michigan has lost a number of high-profile employers in recent years to neighboring Indiana, where the state minimum wage is lower, currently at $5.85 per hour.
In West Virginia, the minimum wage will increase a whopping 70 cents per hour on July 1, 2008, from $6.55 per hour to $7.25 per hour.
The Kentucky minimum wage will also increase by 70 cents, from $5.85 to $6.55 per hour on July 1, 2008.
The federal minimum wage will increase on July 24, 2008, from $5.85 to $6.55 per hour. The federal minimum wage covers the employees of businesses engaged in interstate commerce or companies with annual earnings over $500,000. Most employers in the U.S. are covered under the federal law.
The federal minimum wage may apply to individual employees as well as businesses. For example, a worker whose job entails answering out-of-state calls qualifies for the federal minimum wage. A worker who ships packages across state lines would also qualify.
If the federal and state minimum wage laws differ, the employee is entitled to whichever provides the greater benefit.
In addition, a number of states will increase the state minimum wage on July 24, 2008 when the federal minimum wage increases. In most of these states, the minimum wage statute doesn’t mention a dollar amount. Instead, it simply extends the federal minimum wage coverage to smaller employers, and ties the state rate to the federal rate.
The minimum wage in Indiana, Idaho, Maryland, North Carolina, North Dakota, Oklahoma, South Dakota, Texas, Utah, Virginia, Montana and Nebraska will increase to $6.55 per hour when the federal minimum wage increases on July 24, 2008.
In Ohio, the state rate will increase from $5.85 to $6.55 per hour on July 24, 2008. However, the change will affect only companies with an annual revenue less than $255,000. For other companies, the state minimum wage remains $7.00 per hour, as it has been since January 1, 2008.
There are three states where the increase in the federal rate will not affect the state minimum wage. In Georgia and Wyoming, the state minimum wage remains at $5.15 per hour. In Kansas, the state minimum wage remains at $2.65 per hour.
In addition, five states have no state minimum wage. Mississippi, Alabama, Louisiana, Tennessee and South Carolina have never implemented a state minimum wage. Most employers in those states are covered by the federal minimum wage.
On January 1, 2008, fourteen states increased the state minimum wage.
The federal minimum wage increased by 70 cents on July 24, 2007 under the Fair Minimum Wage Act of 2007. The rate went from $5.15 to $5.85 per hour. This was the first increase in more than a decade. Two more increases are on the horizon. On July 24, 2008 the federal rate will increase by 70 cents to $6.55 per hour. Finally, on July 24, 2009, the federal rate will increase to $$.25 per hour. The increase amounts to an additional $1,456 per year for a full-time minimum wage worker.
But those employers liable to follow the Fair Labor Standards Act—such as those interstate employers exempt from the West Virginia minimum wage law—could soon be paying the higher $5.85 per hour minimum wage anyway, if and when the federal minimum wage increase becomes law.
Where the West Virginia minimum wage law would leave an important mark on employers in the state, however, are those smaller West Virginia employers who either have less than six employees or who do not bring in as much as $500,000 per year in revenue. Those employers on the revenue side of the equation would not be included in the Fair Labor Standards Act, so if I am not mistaken, they would then be able to pay basically their employees whatever they feel to be the market acceptable rate for their labor and productivity.
The employers with less than six employees pose an interesting situation. They are automatically exempt from the upcoming West Virginia minimum wage increase, but they could be still bringing in more than $500,000 per year in revenue despite the fact that they are employee wise considered small companies. In that case, then they would be liable to pay the federal minimum wage, and thus could also face the increase in the federal minimum wage come the time when the president signs it, if he eventually ever does sign the federal minimum wage bill.
Does this mean all of these employers, however, have to have themselves a new West Virginia minimum wage poster come June 1? I would hope that most of you, my loyal readers there in West Virginia, would be driven and aware enough to already have that poster in place and ready to go for the change to the West Virginia minimum wage coming up in a matter of weeks.
There have been some calls to get rid of the West Virginia minimum wage in the past year, but other than that, the new law that was passed in the state last year is set to go into effect. Last March 2006, the West Virginia law makers in power voted to pass a new West Virginia minimum wage bill, and as its first change, the law marked June 2007 as the time when the West Virginia minimum wage would increase.
So West Virginia employers, now is the time to be preparing yourselves for the upswing from the current level of $5.15 per hour to the new upcoming West Virginia minimum wage of $5.85. According to the law passed last year, the next increase to the West Virginia minimum wage will occur in June of next year, when the minimum wage will reach $7.25 per hour.
The West Virginia minimum wage law, however, does not affect all employers in the state. In fact, only employers that have six or more workers on their books, as well as bring in more than $500,000 in revenues per year, are to be paying this new minimum. Also not included in the West Virginia minimum wage law are those employers who are considered to be participating in the so called interstate activity, whether that be transporting goods across state lines, selling across other states, sending employees into more than one state, or other forms of activity in states other than West Virginia.
The interesting thing is that such interstate employers—or at least those employees of theirs participating in the interstate activity—are covered under the federal Fair Labor Standards Act, and thus at the moment, come June 1, would still be able to pay the current active federal minimum wage of $5.15 per hour.
So as we said, it is estimated that about 10 percent of the minimum wage earners in the state of West Virginia will not get any price increase to their salaries when the state minimum wage goes up to $5.85 this June, nor will they get an increase in their minimum wage payments when it goes up to $7.25 per hour in June 2008.
But what will happen to these workers when the minimum wage goes up on the federal level. Will the proposed federal minimum wage increases being proposed in the House and Senate in Washington DC affect any of these workers down in West Virginia. Some may get minimum wage increases.
If you remember, the West Virginia minimum wage law excludes any employees of companies with interstate operations. But those companies are included in the Fair Labor Standards Act on the federal level. That would mean that they would be liable to pay any amount that the new federal minimum wage increases to. For workers of these interstate operations, then, the new federal minimum wage will equal a pay raise. And as for the employers of these workers, it will mean that their salary figure on their ledger book will get bigger.
What of the other workers? Well, the West Virginia minimum wage law includes those companies that make $500,000 or more in revenue, and these companies are also included in the FLSA and thus are liable for the federal minimum wage. That means that they will have to pay the higher of the two—the state and the federal minimum wage—which will end up being the state.
As for workers of employers with fewer than five employees, they will be left to make basically whatever their employer wants to pay them, as they are not covered by either the state or the federal minimum wage laws.
We all know about all of the states in the last November elections that raised their minimum wages due to voter decisions at the polls. But there were also several states in the mix who changed their minimum wage in 2006 due to actions by their state legislators. West Virginia is one such state. As of last spring, the West Virginia legislature passed a bill that increased its state minimum wage. The first of the minimum wage increases in West Virginia will take place this coming June 2007, when it will go up to $5.85 per hour. Then in June 2008, it will increase to $7.25 per hour.
The new law as it stands now—as it was passed back in March 11, 2006—would only make employers six or more employees pay the higher minimum wage. The employers must also make at least $500,000 per year in revenues, and the new minimum wage law does not affect any employer with an interstate operation.
According to my best sources, there are about 20,000 minimum wage workers in the state of West Virginia. One of the criticisms of the West Virginia minimum wage bill was that it will not completely affect all of these minimum wage workers. In fact, according to some estimates, the lowest amount of minimum wage workers affected could be as low as 2,000 of them—in other words, about 10 percent of all minimum wage workers in the state of West Virginia get a raise from this law as it stands now.
Of course, I will talk more on that in a second, because the new federal minimum wage could change all that—or at least change some of that. But in the meantime, I am again left to raise the question of why the departments of labor and statisticians keeping all of these minimum wage facts do not also keep track of the number of employers affected by these new laws.