Today, and every summer through 2009, the federal minimum wage will increase $0.70 an hour. For those working full time at the federal minim wage, the increase to $5.85 an hour will mean an extra $1,400 over the previous rate. This 14% raise is pretty significant, but it still keeps the minimum wage earner who provides for a family of three in poverty.
If minimum wage increases kept pace with inflation since 1970, the minimum wage today would be $8.77. If it tracked inflation since 1956, the wage would be $7.27.
Interestingly, the minimum wage would be $3.39 if 1938′s rate of $0.25 was adjusted for inflation.
Here in New Jersey, the state minimum wage is already $7.15. The state’s economy hasn’t collapsed yet and business owners seem to be getting by. All salaries in the state seem to be somewhat higher than most of the nation. Real estate prices and property taxes are higher, and insurance rates are higher, but gas prices are lower.
Higher minimum wage can be done. Businesses who claim they will have to let employees go or raise prices will do what they have to do to survive and compete, and most likely find a way to make it work without the threatened layoffs. The staggered increases will help these businesses, particularly when compared to an immediate full increase to $7.25.
But is a minimum wage hike just an empty gesture? If minimum wage earners are mostly suburban teenagers from families nowhere near poverty, then a minimum wage hike doesn’t help those struggling in poverty, who most likely work part time at a job a little bit higher than the minimum wage.
Well, it will help indirectly, because those close-to-minimum-wage jobs, like those Wal-Mart, will be buoyed by the wage hike.
The minimum wage hike is necessary but it’s probably not going be the biggest contributor to the mission of making poverty history.