Federal Minimum Wage Increase
July 24th, 2009 | Hannah Goitein
Effective July 24th, 2009 the Federal Minimum Wage will increase from its current level of $6.55 (previously $5.85) to $7.25 an hour, according to the United States Department of Labor. This amounts to an increase of 10.7%. These wage floor increases were mandated by a bill passed by Congress in 2007, when the minimum was $5.15 an hour, where it had been for many years prior. With few exceptions, almost all employers are required, under the Fair Labor StandardsAct (FLSA), to pay at least the federal minimum wage to their hourly non-exempt employees for all hours they work.
Accordingly, advocates for low-wage workers believe that a higher minimum wage is a step in the right direction, even though for many people it’s barely enough to survive on. With this new increase to $7.25 an hour, a full-time worker still only earns $15,080 a year. At the nationwide work-week average of 33 hours, the worker would earn only $12,441. The United States government sets the poverty level at $10,830 for one person or $22,050 for a family of four in 48 states and D.C. A worker who is above this low poverty level would not be eligible for certain welfare-related assistance. Thereby, the new federal minimum wage will just barely put many Americans above the poverty level, exempting them from certain assistance, yet barely allowing them to live comfortably.
While the federal minimum wage applies to all states, (click here for more information on each state’s minimum wage laws), individual states have the right to pass a higher minimum wage than the federal level. Some states will not be affected by the increase in minimum wage as they already have a minimum wage above $7.25. The impact will most be felt in 30 states (see below) where the minimum wages are lower than this rate, and many of them plan to match the federal minimum once it increases. Seven states already have laws mandating $7.25 minimum pay, while 14 states and the District of Columbia exceed the new minimum. Employers are required to pay whichever is the highest, federal or state.
Employers in the following 30 states will generally see the minimum wage they are required to pay increase to $7.25 per hour on July 24, 2009:
- New Jersey
- New York
- North Carolina
- North Dakota
- South Carolina
- South Dakota
- Wisconsin (state law is not tied to federal law, so employers covered by state, but not federal law, will not be required to pay federal minimum wage.)
- Wyoming (state law is not tied to federal law, so employers covered by state, but not federal law, will not be required to pay federal minimum wage.)
In the District of Columbia, the minimum wage is automatically $1.00 per hour higher than the federal rate if that amount is greater than $7.00. Therefore, the minimum wage in the district will increase to $8.25 per hour beginning July 24, 2009.
In Nevada, the state minimum wage rate varies for employers, depending on whether the employer offers its employees health benefits, and is indexed to inflation. The increase in the federal rate on July 24th will require Nevada employers that provide health insurance to pay their employees $7.25 per hour. Employers that do not offer qualified health insurance must pay their employees $7.55 per hour.
This year’s increase in the federal minimum wage will generally have no effect on employers in the following 19 states because they currently have minimum wages at or above $7.25 per hour:
- Arizona (the state minimum wage is $7.25 and is indexed to inflation)
- California (the state minimum wage is $8.00)
- Colorado (the minimum wage is $7.28 and is indexed to inflation)
- Connecticut (the state minimum wage is $8.00 ($8.25 on 1/1/10))
- Hawaii (the state minimum wage is $7.25)
- Illinois (the state minimum wage is $8.00 ($8.25 effective 7/1/10))
- Iowa (the state minimum wag is $7.25)
- Kentucky (the state minimum wage increased to $7.25 on July 1)
- Maine (the state minimum wage is $7.25 ($7.50 on 10/1/09))
- Massachusetts (the state minimum wage is $8.00)
- Michigan (the state minimum wage is $7.40)
- New Hampshire (the state minimum wage is $7.25)
- New Mexico (the state minimum wage is $7.50)
- Ohio (the state minimum wage is $7.30 and is indexed to inflation)
- Oregon (the state minimum wage is $8.40 and is indexed to inflation)
- Rhode Island (the state minimum wage is $7.40)
- Vermont (the state minimum wage is $8.06 and is indexed to inflation)
- Washington (the state minimum wage is $8.55 and is indexed to inflation)
- West Virginia (the state minimum wage is $7.25)
*For more information on the minimum wage laws, click here.
**For a consolidated table of state minimum wage updates effective July 1st, 2009, click here.
Hannah Goitein: Hannah Goitein is currently a law student at the George Washington University School of Law and a legal intern for Workplace Fairness. Prior to law school, Hannah graduated magna cum laude from the Isenberg School of Management at the University of Massachusetts Amherst. Hannah previously worked for AT&T as a manager and as a manager for a restaurant before that. Through her management experience coupled with her legal and business education, Hannah became committed to helping Workplace Fairness address workers right issues and continues to be actively involved in improving the workplace. Hannah lives in Washington, DC.