AHN: U.S. Minimum Wage Increases; Business Owners Disagree On Potential Outcome

By Jessica Pupovac
AHN (All Headline News), 7/24/07

Washington, DC (AHN) - Advocates for low-wage workers today are celebrating the first increase in the federal minimum wage to go into effect for over a decade, from $5.15 to $5.85 an hour.

The step is part of a three-part process legislated by Congress in May. On July 24, 2009, at its culmination, the federal minimum wage will reach $7.25. That comes to just over $15,000 a year before taxes for a 52-week work year. The federal poverty level for singles is $10,210, couples is $13,690 and $17,170 for families of three.

According to the Labor Department's Bureau of Labor Statistics, about 1.7 million people made $5.15 or less in 2006, and for those workers, today's pay raise is a welcome change.

However, many concede that the increase still falls short of what is needed to pull some of the nation's poorest workers out of poverty.

Helen Norman, co-owner of the Garnett Dairy Queen in Kansas, is one of those people. "As a business owner, I believe we need to pay higher wages so that people can support their families. In Kansas, we have the lowest state minimum wage in the country, $2.65 an hour. With the cost of living constantly going up, even making ends meet at the new $5.85 federal minimum will be a struggle. How do we expect people to survive?"

Other business owners, however, fear the effect that any increase will have on their staff and clientele. According to the National Restaurant Association, the last minimum wage increase cost the restaurant industry more than 146,000 jobs and halted new hires. Brendan Flanagan, the association's vice president of federal relations, warns that restaurants will likely respond to this pay hike with "increases in menu prices, elimination of some positions and reduction of staff hours to try and offset some of the increased labor costs."

Nonetheless, the Let Justice Roll campaign, run by a coalition of organizations across the country fighting for a living wage, says that even in 2009, when the plan goes into full effect, "workers will still have less buying power than their counterparts in 1956."

"It won't end poverty wages," said Campaign Director Katy Heins. "Let Justice Roll will [continue to] work to raise the federal minimum wage to a living wage as fast as possible," says Heins.