NCPA - National Center for Policy Analysis


July 23, 2007

Many lawmakers, along with advocates for low-wage workers, are celebrating the first increase in the federal minimum wage in a decade.  Yet many acknowledge that raising it from $5.15 an hour to $5.85 will provide only meager help for some of the lowest-paid workers.

Facts about the minimum wage:

  • Minimum wage workers will get an additional 70-cent-an-hour boost each summer for the next two years, ending in 2009 at $7.25 an hour.
  • That comes to just above $15,000 yearly before taxes for a 52-week work year.
  • Someone earning $5.85 an hour brings home $12,168 a year before taxes.
  • The federal poverty level is $10,210 for singles, $13,690 for couples and $17,170 for families of three.

Employers of many low-wage workers say a higher minimum wage means raising prices, cutting back on employees' hours or letting some workers go.

"When you go into the grocery store now, you may be checking your own groceries, you may be bagging your own groceries," said Jill Jenkins, chief economist for the Employment Policies Institute.  "When you have to pay more, employers begin to find other options to keep costs down."

According to the National Restaurant Association, the last minimum wage increase cost the restaurant industry more than 146,000 jobs, and restaurant owners put off plans to hire 106,000 employees.

Source: Jesse J. Holland, "Federal minimum wage set to rise," Associated Press/Fort Worth Star-Telegram, July 23, 2007.


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