Minimum Wage Increase Takes Effect
Feature Story by Jon Jackson - 7/25/2008
The federal minimum wage rose to $6.55 on July 24, giving more than 2 million workers a few more dollars in their paychecks.
The wage increase is the second part of the three-phase Fair Minimum Wage Act of 2007. The final increase will be next year, when the minimum wage goes up again to $7.25 an hour.
The wage increase comes at a time when families need it most. Low-income families have been strongly affected by rising gas prices, inflation and its effects on food prices and increasing home energy prices.
“This wage increase we are celebrating does not go high enough, but the money is nonetheless very real in the pockets of people in our communities who work hard and struggle to work their way up,” said Maude Hurd, president of Association of Community Organizations for Reform Now (ACORN).
According to the Center for American Progress (CAP), the newest wage increase is still far from enough. Inflation in the economy has caused the prices of goods and services to rise over time, making it even more expensive to buy clothes or groceries. Seventy-five percent of the extra income workers will receive from the increase will most likely be spent on the increasing costs of basic needs like food and gas.
The Economic Policy Institute (EPI) has estimated that a family of four would need an annual income of at least $34,732.28 just to meet its basic needs. The new minimum wage will equal only $13,624 a year for one full-time employee, which still puts that worker below the poverty line ($16,705 a year).
Despite its shortcomings, the new minimum wage is a step forward and helps advance the cause of economic equality. Women will benefit the most from the minimum wage increase. When the increase goes up to $7.25 next year, 59 percent of workers who will benefit from this increase will be women.
In addition, a disproportionate share of minorities will benefit from a minimum wage increase. African Americans represent 11 percent of the total workforce, but are 16 percent of workers affected by an increase. Similarly, 14 percent of the total workforce is Hispanic, but Hispanics are 19 percent of workers affected by an increase, according to EPI.
The recent wage increase is still less than the minimum rate set by 23 state governments and the District of Columbia. Even when the final increase is seen to $7.25 next year, it will still be below the minimum rate in at least 11 states and D.C.
Advocates will continue to push for additional increases that keep better pace with inflation.
