Federal Minimum Wage Increase
Effective today the federal minimum wage has increased to $5.85 per hour.
This is the first increase to the federal minimum wage since September 1997 and ends the longest period without a federal minimum wage increase since being enacted in 1938.
In May of this year, President Bush signed legislation that will increase the federal minimum wage by $0.70 each year until 2009. In 2009 all minimum wage jobs will be required to pay no less than $7.25 per hour.
While this increase will likely be good news to many teenagers and adults working part-time jobs, I’m not so sure how much it will help the working poor. A person working 40 hours per week at minimum wage will see an increase of roughly $1,400 per year before taxes.
In the end, an increase is an increase and it is a good thing to see from a worker’s perspective. Smaller businesses might have a different opinion as it will now cost them more to staff their business, although there is also a $4.84 billion dollar tax relief for small businesses included in this legislation to help hire new workers and offset the increase in the federal minimum wage.
For those currently earning minimum wage, I hope you enjoy the increase in your paycheck and have the ability to set some of the increase aside for long-term savings!