Federal rate rises from $5.15 to $5.85; is first of three hikes
THE FEDERAL MINIMUM wage rose by 70 cents July 24 — from $5.15 to $5.85 an hour — as the first installment of a three-step rate increase went into effect nationwide. Two more rate steps, to $6.55 and $7.25, are scheduled for July 24, 2008, and July 24, 2009, respectively.
The last time the federal minimum wage saw an increase was 1997, a decade ago. Most states and some local governments establish their own minimum wage rates, some of which are higher than the federal level.
Credit for the new federal increase goes to the Democratic majorities in both houses of Congress. Shortly after taking office in January 2007, Democrats in the House passed a “clean” bill (with no special interest set-asides). However, pro-business politicians in the Senate insisted on tax breaks for business, and the threat of a filibuster loomed. A compromise bill was finally signed by President Bush May 25. It included the $2.10 minimum wage increase (over three years) and $4.3 billion in business tax breaks.
According to the Economic Policy Institute, 5.6 million workers — four percent of the work force — currently earn less than $7.25 cents an hour and will be affected directly by the minimum wage increase. EPI says another 7.4 million workers — six percent of the work force — will be affected by the “spillover” effect of the higher minimum wage. The Fair Labor Standards Act of 1938 established the first minimum wage in the United States, which was initially set at 25 cents an hour.
