Approximately 647,000 minimum wage workers across the country will be ringing in this new year with a modest pay raise, as Arizona, Colorado, Montana, Ohio, Oregon, Vermont and Washington are set to increase their minimum wages by nine to twelve cents on January 1. All seven of these states will have minimum wages above the federal level, which is currently $7.25 an hour, but Washington will have the highest at $8.67.
The salary boosts will provide essential help to workers who struggle to to keep up with the rising costs of living on an average minimum wage salary of about $15,000 a year. The increases may also boost the economy, since job gains in the wake of the recession seem to be disproportionately concentrate in low- and mid-wage industries such as food services, retail, manufacturing, and administrative and wastes services.
Christine Owens, executive director of the National Employment Law Project, pointed out that another benefit of raising the minimum wage is that those workers are the most likely to cycle their money back into the economy, since many of them can't afford to save it.
"In addition to helping working families in the states make ends meet, raising wages for the lowest-paid workers will help sustain consumer spending and spur economic recovery. Minimum wage increases go directly to workers who spend them immediately - because they have to - on basic necessities like food, gas, rent and clothing," she said.
According to two recent studies cited by NELP, modest minimum wage increases do not cost people jobs. Economists compared employment levels between 1990 and 2006 in each pair of U.S. counties that straddles the border of two states with different minimum wage levels, and they found that the counties with higher minimum wages did not have higher unemployment than the others.
Nearly 3.6 million workers are paid wages at or below the federal minimum, making up 4.9 percent of all hourly-paid workers, according to the Bureau of Labor Statistics. Three quarters of minimum wage earners are 20 years or older, and more than 60 percent are women.
"These small increases mean that thousands of minimum wage earners like health aides, child care workers, restaurant workers and retail clerks will be better able to put food on the table, provide for their children, and keep a roof over their head," Owens said. "Congress and other states should follow this smart policy of indexing the minimum wage to keep pace with the rising cost of living."