Some States Raise Minimum Wage While Federal Rate Remains Same

Raise Means Hundreds of Extra Dollars for Minimum Wage Employees in 8 States

by Lee Avery on October 3, 2011

One of the lesser-publicized problems with increasing public spending options during the recession was the lack of income, particularly of the disposable variety, for those make the bare minimum of wages. Simple logic would say that increasing the minimum wage would result in creating more consumer spending. Though the federal rate has remained constant at least through 2012, 8 states will raise their own minimum wage.

Washington has raised its minimum wage, already the highest in the nation at $8.67, to $9.04 in the following year. Other states, particularly Oregon at a new wage of $8.80, have decided to follow suit. The increases range from a $0.28 increase to one of $0.37. These increases will add to a full-time minimum wage earners annual salary by anywhere from $582 to as much as $770.

While they have yet to announce the actual amounts of their own increases, Arizona, Florida and Vermont will all increase their respective minimum wage rates in 2012. The reason for the number of increases to minimum wages across the country stems from state laws that require the minimum wage to annually adjust for inflation. The federal rate does not adjust, leaving it unchanged since 2009.

18 states currently mandate higher minimum wages that the one dictated by the federal government. Washington, D.C. also has a wage higher than $7.25. According to the National Employment Law Project, an advocacy group in favor of raising the minimum wage, increasing pay rates for low-income workers will help increase overall consumer spending. A large part of the new jobs added to the economy since the end of the recession has been in the minimum wage area.

“We can’t afford to have workers’ buying power erode when, in fact, we need spending to get the economy going,” says Jen Kern, the minimum wage coordinator at the NELP.

Some experts have become increasingly vocal about raising the federal minimum wage during discussions concerned with how to avoid another recession. Many business groups have strongly denounced the idea as one which would cause decreases in hiring. Some economists, however, argue that by raising the federal minimum wage above $10 per hour, added income to the lowest income earners would create new spending opportunities.

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