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Minimum Wage – What Does It Mean

Date: 03/09/2006 | Category: Business | Author: Heather Long

An article Center for American Progress discusses minimum wage and the lack of increases in the last 9 years. The article begins with an interesting statement: Franklin Roosevelt stated that, “No business which depends for existence on paying less than living wages to its workers has any right to exist in this country.â€? Nothing more eloquently captures progressives’ value of rewarding hard work with a living wage.   It has been nine years since the conservative-led Congress last raised the federal minimum wage (currently set at $5.15 per hour). During the same period, Congress has given itself eight cost of living pay increases and CEOs are receiving record pay.  In fact, if the minimum wage were raised at the same rate as CEO salary increases, the minimum wage today would be $23.03/hour.

If the minimum wage were $23.03 an hour, a lot of small businesses would be out of business because folks would be working for minimum wage rather than for themselves. But if the minimum wage is raised, what effect will that have on the small business owner?

 

Well the Federal minimum wage is $5.15 an hour which means the average 40 hour a week employee will earn about $206 a week before taxes. But many states have already increased their minimum wages and the trend is on the rise across the board for 2006. This is a good thing for the economy and the minimum wage worker, but it could lead to cut backs for the small business owner if increases cost him what amounts to hundreds of dollars more each year for the same amount of work the previous wage generated.

Individual owners may have to reassess their business, their employees and choose where to make cutbacks or raise their prices, which will affect their consumers and their overall business. Investigate what’s happening with minimum wage as you plan your quarterly budgets and plan ahead to avoid problems with finances if minimum wage hikes will affect you and your employees.

On January 1, 2006, minimum wage increases went into effect in seven states. Washington, which has the highest minimum wage in the nation, jumped to $7.63/hour. Oregon is now at $7.50/hour. Vermont is at $7.25/hour. Connecticut is now at $7.10/hour. New York and Hawaii are now both at $6.75/hour and Florida is at $6.40/hour. On Jan. 17, Maryland became the eighth state to raise its minimum wage this year when the Maryland General Assembly voted to override Gov. Robert Ehrlich’s veto of a bill raising the state’s minimum wage from $5.15/hour to $6.15/hour.

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