Wage workers in ten states started the year off with good news as 10 states boosted the minimum wage for 2013.
In Rhode Island workers will see the biggest difference with employees there bringing home an average of $510 more per year with the raise. Last June the state passed a law raising its minimum wage 30 cents to $7.75 an hour. Workers in Colorado, Florida, Arizona, Missouri, Montana, Oregon, Vermont, Washington and Ohio will also take home more pay for the year as the minimum wage in those states will increase between 10 and 15 cents an hour which translates roughly to an extra $200-$400 more in take home pay per year.
According to reports, an estimated 855,000 workers will be directly affected by the wage changes, while another 140,000 are projected to be indirectly affected by the changes as employers readjust their pay scales to accommodate the new minimum, according to analysis by the Economic Policy Institute. The new hourly rates will range between $7.35 in Missouri and $9.19 in Washington state, which has the highest minimum wage in the nation. Though thanks to the looming “fiscal cliff” deal, the question remains whether workers will actually notice the additional pay. Eliminating the payroll tax cut, first enacted in 2010 could effectively eliminate the wage boost.
The raises were not simply the result of benevolent lawmakers who understand that rising incomes for hourly workers are a critical component of digging our country out of economic stagnation. These states all have “indexing” laws that require automatic annual adjustments to the minimum wage to keep pace with rising living costs. As noted by Jen Kern of the National Employment Law Project, workers in states that don’t have such indexing laws lose out. “If you don’t do this, the lowest wage earners are going backwards” Kern told CNN.
States are required to set state wage laws at least at the same as the federal minimum wage. That wage has been set at $7.25 an hour since 2009 and is not indexed to inflation. That works out to an annual income of about $15,000 — thousands of dollars below the poverty level for a family of four. The new state increases, while important, will hardly be enough to lift families out of poverty. At best it will mean those families don’t face an immediate threat of sliding into even deeper economic trouble.
The increases are also important since more and more Americans are hourly wage-earners. According to the NELP, the majority of jobs created during the economic recovery have been low-wage positions that pay $13.83 an hour or less. “That makes it harder to dismiss the minimum wage as some marginal labor standard,” Kern said. “In fact, it’s a key component of economic recovery because so many of the jobs that are now characterizing our economy are impacted by minimum wage.”
In 2013, 19 states and the District of Columbia will have rates above the federal level. And while our elected leaders point their fingers at self-created economic crisis and argue over saving money for those who already have millions tucked away, when they decide to tackle wage stagnation and the expansion of poverty in this country that has come with it, then we will know they are serious about creating positive economic growth in this country.
Photo from uhuru1701 via flickr.