States Take Another Look at the Minimum Wage
By Jennifer Burnett, CSG Senior Researcher
New York Sen. Jeffrey D. Klein thinks it is time for his state to raise the minimum wage. Doing so, he said, will help more than those who currently earn the lowest income rate.
“Raising the minimum wage is not only the right thing to do for the thousands of New Yorkers who are struggling to make ends meet every week, it also benefits New York state as a whole,” Klein said in press release.
Klein backs up his opinion with a report he commissioned from the Economic Policy Institute, a Washington, D.C.-based nonpartisan think tank. That report found that New York state would see an infusion of $600 million in economic activity and a net creation of 4,800 new jobs if the state’s minimum wage was raised to $8.50 an hour, from its current minimum of $7.25 an hour.
“This report shows that money in the pockets of minimum wage earners ultimately means a greater demand for additional jobs,” said Klein.
Klein is sponsoring legislation with Assemblyman Keith Wright and Assembly Speaker Sheldon Silver to raise the minimum wage to $8.50 an hour, then link the rate to inflation beginning in January 2014—a practice in statute in 10 states.
New York is not the only state considering increasing their wage floors this year; at least 10 states are debating raising their rates. Members of Connecticut’s General Assembly’s appropriations committee recently approved a bill to raise Connecticut’s minimum wage by $1 an hour over the next two years; the minimum wage there is currently $8.25 an hour.
Similarly, a Massachusetts legislative committee passed a bill to increase the state’s minimum wage to $10 an hour, which would make it the highest minimum wage in the country, just above Washington’s rate of $9.04 an hour. In Missouri, voters may get a chance in November to consider a ballot initiative that would raise the state’s minimum wage to $8.25 an hour in January 2013 and keep the rate moving up in future years by tying it to inflation. A bill in California, now in committee, also would tie that state’s rate to inflation. The minimum wage in California currently sits at $8 an hour, 75 cents an hour higher than the federal rate.
But the move to raise the minimum wage comes with both criticism and praise. Proponents of raising state minimum wages argue that while the federal rate has remained stagnant, the costs for housing, food, utilities and health care continue to climb, leaving those earning the minimum wage with less money to afford the basics. The federal rate hasn’t increased since 2009.
“What we’re talking about, anybody working for $8.25 per hour is working for a poverty wage,” Sen. Edwin Gomes, a member of the Connecticut Appropriation Committee, told the Connecticut Post.
Opponents of raising the minimum wage warn that doing so could have a negative impact on businesses—especially during anemic economic times, like now. Further, critics argue that a minimum wage hike actually hurts those that it intends to help by forcing employers to cut jobs at the low end of the pay scale.
“I think it’s well understood that raising the minimum wage hurts workers on the lower end of the pay scale in that it does kill jobs,” Randal K. Johnson, senior vice president for labor issues at the U.S. Chamber of Commerce, recently told the New York Times.
Although most states establish their own minimum wages legislatively, federal minimum wage law supersedes state law. That means if the minimum wage established by the state is higher than the federal rate, the state rate applies. If the state’s minimum rate is lower than the federal rate, the federal rate applies. Five states—Alabama, Louisiana, Mississippi, South Carolina and Tennessee—don’t have an established minimum wage requirement.
Eighteen states plus the District of Columbia, however, have rates higher than the federal rate of $7.25 an hour, ranging from a low of $7.40 an hour in Michigan and Rhode Island to a high of $9.04 an hour in Washington.
On the federal side, Sen. Tom Harkin has proposed an increase to the federal rate that would occur in three increments, eventually landing at $9.80 an hour in 2014. That rate would be tied to inflation.