Minimum Wage Rises Today To $6.55 Per Hour

WASHINGTON — About 2 million Americans get a raise Thursday as the federal minimum wage rises 70 cents. The bad news: Higher gas and food prices are swallowing it up, and some small businesses will pass the cost of the wage hike to consumers.

The increase, from $5.85 to $6.55 per hour, is the second of three annual increases required by a 2007 law. Next year's boost will bring the federal minimum to $7.25 an hour.

Workers like Walter Jasper, who earns minimum wage at a car wash in Nashville, Tenn., are happy to take the raise, but will still struggle with the higher gas and food prices hammering Americans.

"It will help out a little," said Jasper, who with his fiancee support a family of seven, and who earns the minimum plus commissions when customers order premium car-wash services.

The bus fare he pays each day to get to work already went up to $4.80 this spring from $4. "I'd like to be on a job where I can at least get a car," he said.

Last week, the Labor Department reported the fastest inflation since 1991 _ 5 percent for June compared with a year earlier. Energy costs soared nearly 25 percent. The price of food rose more than 5 percent.

So the minimum wage hike is "a drop in the bucket compared to the increases in costs, declining labor market, and declining household wealth that consumers have experienced in the past year," Lehman Brothers economist Zach Pandl said.

The new minimum is less than the inflation-adjusted 1997 level of $7.02, and far below the inflation-adjusted level of $10.06 from 40 years ago, according to a Labor Department inflation calculator.

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Twenty-three states and the District of Columbia have laws making the minimum wage higher than the new federal requirement, a group covering 60 percent of U.S. workers, according to the Economic Policy Institute, a think tank.

"You get desperate, because you can't really pay for everything," said Gladys Lopez, 51, a garment worker from Adjuntas, Puerto Rico, who makes military uniforms and has earned the federal minimum for 18 years.

She says she would need to make at least $50 more a week to pay all her bills and take care of her 84-year-old mother, whom she supports.

When the minimum rises again next year, catching up with more states, more than 5 million workers will get a raise, said Lisa Lynch, dean of the Heller School for Social Policy and Management at Brandeis University.

Some small businesses are already making plans to raise prices to offset the higher wages they have to pay their workers.

David Heath, owner of Tiki Tan in College Station, Texas, said the increase will force him to raise prices for his monthly tanning services by about 12 percent. Tiki Tan had been paying its employees $6 per hour.

"There just isn't any room for profit, and so this is why prices will have to go up," he said, citing the wage increase and higher fuel costs. "I have to recoup those costs."

The increase in the minimum wage could push food prices even higher by rising the pay for agricultural workers, said Brian Bethune, chief U.S. economist at consulting firm Global Insight.

But he said he did not expect the change to have a major impact on the economy because recent increases in productivity, which enables companies to produce more with fewer workers, are keeping labor costs in check.

That makes it unlikely the minimum wage increase will trigger a "wage-price spiral," in which workers facing higher costs demand more pay, which in turn causes companies to raise prices higher, sending inflation coursing through the economy.

And most businesses, even restaurants and other service sector companies, already pay above the minimum wage anyway. Dan Whitaker, general manager at Anis Bistro in Atlanta, a casual French restaurant, said employees earn at least $8 an hour.

"You can't get a dishwasher for minimum wage," he said.

___

AP Business Writers Ellen Simon and Anne D'Innocenzio in New York contributed to this report.

Comments

[Andman0121]

Part 2
Second, this debate over whether or not to increase minimum wage is essentially pointless because the capitalist market we operate under is so corrupt, so inefficient, so UNFAIR that to argue within its channel doesnt solve anything. Its sort of like arguing what color to paint the walls of a house built on a foundation of sand. It doesnt matter what color when the freaking house is sinking! The answer to all of this is either a radical transformation of our economic system (dont hold your breath) or massive regulation accompanied by aggressive threats on big business (see above).

[Andman0121]

Part 1
Should we increase minimum wage? Republicans normally say we shouldnt because then those businesses cut their worker ratios to offset the now increased cost of operating said businesses.
One, what is the alternative in a purely moral sense of debate? How can someone possibly say that the minimum wage should not be increased for individuals who can barely make ends meet? Ive seen hard-working people literally SLAVE for these wages and they contribute to our economy a hell of a lot more than those who make the big bucks (im looking at you BIG BUSINESS EXECS). I say we give them a bigger minimum wage pay already installed. The government should literally pay small business owners extra funds/tax breaks for this change and as for the BIG businesses...HA! Deal with it! You cant possibly tell me that increasing minimum wage for a McDonalds employee will bring that mega-corporation to a grinding halt. True, their profits will be smaller but I think the higher-up execs will survive with a 5k pay decrease and possibly one less corvette. Oh and if these BIG businesses try to offset the situation through layoffs than thats when the government should step in and say nice try. If you want to do business in this country you better think twice about that decision. If they decide its cheaper to do business in Mexico or wherever than thats when they should be banned from this country all together.

[iambusto]

terrible logic there. like i said in my post before,

you can force the businesses to pay a set minimum wage (whatever the congress decides what it should be...could be 10 could be 20..heck could be 40$/hour).

what the congress cannot do is set how many employees a company can have. that just is not going to happen.

so take your pick.

[Andman0121]

Exactly my point when I made the sinking house analogy: we need to make FOUNDATIONAL, FUNDAMENTAL changes to our economic system otherwise this entire argument is irrelevant since we are traveling within the unworkable channel anyway.

I never said the government should establish how many employees a business can or cannot have. Heck, they can employ 1 to a million. My point is the government should be given the power to ban companies from doing business in this country if they a.) pack up and leave for cheaper labor markets, b.) pay little wages to individuals they KNOW would essentially destroy their business if they didnt exist, and/or c.) are found to be completely corrupt which in turn sucks money from us taxpayers in the form of a bailout or taxbreak!

We offer these companies one of the greatest markets in the world. BELIEVE ME they are not gonna want to leave. That means WE have THEM by the ba**s and not vice versa.

[RightWingMarine]

There are still slaves in this country? I believe you meant to say that you saw people who made a conscience decision to go to work for a particular employer and chose to work very hard at their jobs like all employees should.

What's the defining line between a big company and a small company? Is a small company 15 or fewer employees but has a huge profit or a company with thousands of employees but has a $9Billion loss in one quarter like Ford? Aren't all small companies wanting to become big companies? Is there any business anywhere that the owner does not want to be successful?

Who is going to pay for this money that we will be giving to small business? Increase taxes to pay for the money I'm giving myself?

Would America be better off if we prohibited companies from working here? What if the pharmacutical companies didn't like your plan and left the country what would we do for medicine? Since it costs on average $200,000,000 to develop a drug that might never go to market it's not something I can do in my kitchen.

If you believe that the current CEO doesn't add value to the company vote him out of office. If you don't own shares in the company, why do you care what the CEO is paid?

[Andman0121]

Part 1

Yeah there still are slaves in this country: the lower-class who have no choice but to work minimum wage jobs. Simple as that.
No. Not all small companies are trying to become big corporations. That transition is not necessarily a mark of success at all. Many small companies are content with being small businesses.

I think the government is more than able to decide what constitutes as a small and large business, they just havent made it official. It isnt that hard to do really.

Yes. America would be better off if we prohibited their businesses because once their top market has been effectively shut down they will come around believe me. As for the pharmaceutical industry they should be thrown out if they dont play ball because, again, their number one market is gone thus they make no real profit. haha who else will take in our corrupt, overpriced pharmaceutical industry? EUROPE (universal healthcare ANYWAY), Canada? Get real.

[Andman0121]

Part 2

Who will pay for this? A million things, some of them including: a higher graduated tax of the wealthy, cutting the defense budget in half (CONSERVATIVELY), putting a stop to ridiculous tax breaks of some big businesses. And it costs $200,000,000 to develop a drug?? REALLY? You cant possibly believe that it really costs that much do you? I can admit that the development of drugs can be expensive but you have to concede that it isnt a coincidence that some of the richest men in America run PHARMACEUTICAL COMPANIES. Half of that money is wasted.

Lastly, what shareholder is gonna want to vote out of office a CEO that makes them richer?? I care what he makes because inevitably my tax dollars end up in his pocket.

[EdtheSned]

There seems to be a vast disconnect between the first and last paragraphs of this article.
The first paragraph: Because of the minimum wage hike, "Two million Americans will get a raise."
The last paragraph: "And most businesses" pay above minimum wage anyway.
Well, which is it?
I could pay seven bucks an hour, and still be paying "above" minimum wage.
The truth of the matter is, in these days and times, seven bucks an hour is a joke. After rent, it leaves you with about $400 a month for all other expenses.
The gist of the article seems to be that, with a hike that low, workers should take some joy in the fact that they, the workers, can't be blamed for all this pesky inflation that would be their fault if they made more.
I'm sure they're overjoyed over that!
Notice there's no comment from Wal-Mart about this lipstick-pig event, but it's ironic that the AP photo shows an employee from, of all places, CostCo, which has always paid quite a decent wage. Even the picture shows how out of touch the media is with the general economy.

[avraamjack]

.
Zt should be $10.
.

[trinity]

Doesn't really matter...Employers will just continue to exploit illegal immigrants so they can get away with paying less than minimum wage.

[Chavez08]

Considering the real cost of living, the minimum needs to be at least $12/hour.

[iambusto]

lets say you are right...and maybe to not be in poverty say the number is 15/hour. lets just assume.

now I am no business owner but what if the business owner (corporation or small business or average mom and pop store) decides that will put a huge dent on the profits and just decide to higher less people and lay off a few.

What are you going to demand in response to that. just curious. I would like an honest answer to that.

what are people going to do if after increasing the minimum wage the companies just decide to lay off workers to keep the profit margin. It is great if my thinking is wrong and the unemployment rate doesnt increase. but what if it did? are we better off?

[iambusto]

What you can do: Force the congress to raise the minimum wage to 15$ an hour.

What you cannot do: Maintain a set employment ratio. You cannot tell an employer how many employees they can keep or not.

so lets raise the minimum wage to 15$ an hour. and pray for the best right....I am NOT claiming that unemployment will shoot up. Lets just raise the minimum wage to that level and see what happens. maybe we will learn a lesson after all.

[BlahBlahBlog]

I'm glad it going up.

I hope it goes up much, much higher.

[ErnestineBass]

What say we put this into perspective?

In 1971 the minimum wage was $1.60 and a gallon of regular gasoline was .26 (cents).

Today the minimum wage is $6.55, or roughly 4X the 1971 rate.

Today the price of regular gasoline is $4.11, or roughly 16X the 1971 rate.

4X for the American worker. 16X for the oil companies. Draw your own conclusions.

[Jezdukowski]

Excellent!

[KillTheMessenger]

If you have to work for minimum wage, you were always screwed. Now you are even more so.

[Chavez08]

Absolutely, but you forgot to mention the cost of electronic communication gadgets/fees needed to perform job duties, food, cars, houses...

I say either Washington doubles the minimum wage or we bring Congress's salaries down to $30K per year so they can gain a little perspective.

[Rule Of Law]

Now show us the price of food relative to 1971!

[mediamarv]

Curious choice of photo to illustrate this story. Is Mr Allen, shown here collecting shopping carts, getting minimum wage? Is him being black a coincidence or is someone saying that minimum wage jobs are mostly held by people of color?/ Does CostCo only pay minimum wage?? See how a not well thought out choice can confuse a story???

[ErnestineBass]

Just a stock photo, marv, nothing to get worked up about.

[EdtheSned]

In this case Mediamarv is right on! With all the other low-wage big box stores to pick from,
(Wallyworld and Home Depot come to mind) the clueless media picks Costco, a store that not only pays decent wages & benefits, but also has a very low turnover rate.
And yeah, I think that the fact that the picture shows a black guy does confuse the issue for a readership that is as clueless as its media masters are.

[trinity]

Costco starting pay is 10.00/hr, most of the employees around where I live make around 12.00/hr or more. A friend of mine has been a cashier for 4 years and makes 15.00/hr.

[SwingingFromCenter]

And of course all this means nothing: The minimum wage in most states is already above what the Federal one will ultimately rise to at completion, anyways.

And for this, there was all sorts of political wrangling. And of course the sheeple thought it was a grand move. It was nothing more than a symbolic gesture designed to trick the masses.

[middleoftheroad]

How many people here own a business and actually have a labor ratio, and PAY people????? Who are dealing with huge gas surcharges on all deliveries, seeing your COGS go up? etc etc etc??? Do you think that all minimum wage workers get paid by some huge box chain corporate entity? What about the small business man? These are the last hold outs on MAIN STREET WHO YOU ALL SEEM TO SAY YOU SUPPORT????? You all say this is a Wal Mart issue and it's not...Just at least think about that...Wal Mart can survive huge spike in minimum wage...Your mom and pop can't...

[sandiegoconservative]

The restaruant next to my business has been able to absorb pretty much all of the increased costs of doing business through smart contracting, but they have had to let 3 workers go recently due to the costs of employing them., which is more than simple wages.

[RightWingMarine]

If increasing the minimum wage decreases poverty why not end all poverty right now by raising the minimum wage to $50 an hour?
A teenager gets a summer job to earn a few dollars and get some experience. Next summer they have learned the value of punctuality, respect for the boss and not goofing off on the job and they can produce more, thus they are paid more. For example if a kid works at McDonalds for a summer at minimum wage and gets some experience the next summer this kid can work for either McDonalds or Wendys. The managers at both shops value having an employee who already has experience. Now the shops could work in collusion and reach a secret agreement to not pay the kid more than the minimum regardless of his experience. But if I am the manager at one of these shops I will immidiatly renege on this agreement and offer the kid a little more to ensure he comes to work for me. Let my competitor train the new kid with no experience.
If I have a company and I pay my employee $6.00 but I make $6.25 for every hour that employee works, that employee gets to keep his job. If the federal government forces the pay to increase to $6.55 but the employee still only produces at $6.25 an hour (and he would because nothing has changed except he is now paid more), guess who gets fired.

[guntotinganglion]

Part 1 of 2

McDonald's and Wendy's are designed for disposable employees. Experience counts for next to nothing. That's why the cash registers use icons instead of numbers...so that unskilled people push the little picture thingee with the french (or was that freedom) fries, and the change comes out without them having to count it (which most of them can't, because math/arithmetic is rapidly becoming a lost art).

The point being, your "scenario" with the teenager working a summer job is one facet of a far larger picture. And there's nothing in the minimum wage law that states it's strictly for students, or first time employees. Did you read the article? What about Gladys Lopez who's been working for the federal minimum wage for 18 years? Your rosy scenario doesn't seem to work out for someone like her, who's simply a victim of her company's unwillingness to compensate her appropriately.

The US government is supposed to look out for it's citizens who are unable to defend themselves against predatory employers who do not value employees, only profits. If they'd do the right thing up front, the minimum wage wouldn't be necessary...kind of like child labor laws. These things are only in place because there are predators among us, and they don't care if their employees aren't making a living wage...only that they're making a profit. Funny though...there's no profit without the workers...but this is a far more involved issue than I can address herein.

[RightWingMarine]

1of 2

I'm more Libertarian than Republican but I know you meant well.
And yet there is not answer the key issues I raise. Why not raise the minimum wage to $50 an hour? Why not $100? This price increase has to be paid by someone and that is the consumers. Businesses pass costs on to consumers. An increase in price results in a decrease in sales. If an employee increases the price of their labor either because they do it or the government requires it, businesses will buy less of that labor. If government raises the price of labor to the point that I lose money by employing someone, then that person gets fired.
The skills learned at summer jobs aren't exclusive to summer jobs. My first job was cleaning up at construction sites but my education didn't stop at learning to push a broom. I learned to be an employee that my current employer values. Without the education I received from the summer job I couldn't be in my career today.
Most people earning minimum wage are teens, hence my example. Most people will move on to a job where they earn more. Why would anyone work for minimum wage for 18 years unless it was their choice? Are there zero other employers in Puerto Rico? This same article states that busboys make more than the minimum. If she can't get a raise go to work somewhere else and get promoted.

[RightWingMarine]

2 of 2

Are child labor laws really a good thing? What of the mother who stuffs envelopes all day to help make ends meet. During the summer couldn't the family use some extra money having the kids stuff envelopes too? Let's go extreme and put the kid to work in an acid mine. There is a great deal of risk in this job and it carries with it an increase in pay or else no one would work there and everyone would stuff envelopes. Could the child be maimed or killed? Sure, but that is the risk of the job and the kid is compensated for this risk. Is the family better off having a child that cannot be employed at all under any circumstance? Why should the government make that decision? Shouldn't the parents and this child himself have some say?
Lastly the role of government isn't to safeguard people from employers. The role of government is to protect us from threats from foreign governments. The role of business isn't to protect employees it is to make a profit for the stockholders. If an employee doesn't like the way a business treats them they can quit. If a consumer doesn' t like the way an company behaves then don't buy the product.

[ErnestineBass]

Zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz

[guntotinganglion]

Much more to the point than my post.

[guntotinganglion]

Part 2 of 2

And simply put, your financial layout is specious, myopic and of course, self-serving (a very Republican way of living). Virtually every time the minimum wage has risen, right wing extremists complain that it's the end of business as we know it, and the world is going to come to an end...and then the economy does fine. A tiny bit (I'll restate...TINY) more money in workers hands means that more money is spent (by them) on necessities, and perhaps a tiny luxury or two, and the circle of wealth in the home of capitalism continues. The money they earn at their level doesn't stay at their level, because they're already at a point where they can't make ends meet. Any money they make, goes right back into the economy through goods and services purchased.

Point...the world isn't the black and white thing that right wing extremists characterize it as. Oh My God...minimum wage has gone up...it's the END OF THE WORLD. Get over it.

[middleoftheroad]

My guess is that you are not a small business owner. I know lots of Dems outside Philly who no longer hire younger workers (which give them the experience that guntotinganglion talks about), and it's because of the minimum increase here (over 7.25 an hr). I used to have 19 on my staff, now I have 15. There are articles ALL OVER on how hard it is to find a job as a young person. "The end of all business"-NO, but you think the small business owner is some Republican, Blue Blood ass hole- Go look at the owner of your local Pizza place (getting Killed from ethanol on wheat, cheese, delivery costs)...If he looks like a Republican Oil Mogul I would be shocked. Go take a mortgage out on your house and start a business...Then you will make sense when you question silly things like Labor ratios. I also bet you are one of the people who bitch about rising prices.

[itolduso]

Yipeee! In my town, you'd need to work 3 full time jobs at that rate just to afford the rents. So how come when I advocate for the homeless I've got to listen to the stupid comments about "bums and panhandlers and thieves"? The vast majority of people in my soup kitchen are workers with children- some have recently lost their jobs, but most quickly find new jobs-that just don't pay enough to live on. Nice job Republicans -You've turned all of America into WalMart!

[middleoftheroad]

It was Hillary Clinton who was on the Wall Mart Board so it ainit just Republicans. I'm just asking what you think minimum wage should be? Let's say there is a business that hires lots of teenagers...Should they have to pay $9.00 an hr for a 16 year old to scoop ice cream, or sell T-shirts, or put cream cheese on a bagel, rip a movie ticket? This is not just FOUND money----in most cases there is a small business owner cutting the check. MOST people who start off with min wage, work out of it pretty quick....IF THEY ARE GOOD. Here in PA the min is over 7 an hr...throw any stats you want from some University Prof, but I have taken people off my crew, made the rest work harder, and kept my labor ratio where it should be. What this will do is make it very hard for kids to get jobs. I know many small business owners that will never hire a 15 or 16 year old no matter what. Anyone who is at a job more then 6 months and is still making minimum wage you have to question WHY?

[itolduso]

Funny how the same crowd that justifies paying $60,000.00 A MONTH to a CFO, or obscene million dollar salaries to "attract" quality heads of business, all of a sudden believes that paying a 'living wage' to workers will bankrupt the whole system! Sorry buddy- we've had the past 8 years to see how your belief system works out - it sucks! I, for one, think that 16 year olds should be in school, and be involved in sports, community service, or doing chores around the house after school, and their parents should be able to earn a living wage and support them! Hire mature workers and pay them enough to live on-and maybe the level of service will improve to the point that people will want to 'shop local' again. Cause I gotta tell you- the exploited, immature kids working for slave wages really treat your customers bad!

[vippy]

What is disgusting is that congress/senate voted themselves an automatic pay increase of $ 15,000
while at the same time turned down our increase in minimum wage. And unlike in Germany,
where people rioted and opposed, the uninformed masses in the US let them get away with it and
we did not oppose it. Show some backbone and vote them out to send them a message.
Unfortunately, it is Repub against DEM and if the DEM is in office we are screwed.

[guntotinganglion]

Democrat or Republican, we're screwed. Or more to the point, we're screwed. Your last sentence makes it look as if you believe there'll be a difference if the Republicans are in office. The only hope is, if the Democrats are in, perhaps they'll avoid more wars of choice...ok, not likely, but probably less likely than if John McBush gets the baton. A Republican in office means more innocent men, women, children and babies sacrificed on the altar of American greed and capitalism, aka collateral damage.

And as to the Congress and Senate, if there were any justice (which there is not), they'd all be making the minimum wage they've set. I guarantee you, if it reflected their pay, it would be a whole lot higher. And let's be clear, Legislative offices are for untrained workers, who very quickly realize which side their bread is buttered on when they take office...on the lobbyist side! There are no minimum experience requirements to be a Senator or Congressperson...so I say, pay them the minimum wage, and encourage them to quit after one term. That's my other proposal...one term of office for EVERY elected position in the US government. No more career politicians!