Minimum wage to increase 70 cents Friday

The final increase in Indiana’s two-year series of minimum wage jumps takes effect Friday.

The state’s minimum wage will increase from $6.55 per hour to $7.25 per hour. The 10.7 percent increase mirrors the federal minimum wage increase to take place on the same day and to the same amount.

Indiana joins 10 other states, including Texas and Virginia, in matching its rate with the federal wage.

But how many people will the new rate benefit?

According to the Bureau of Labor Statistics 2008 report released in March, only about 286,000 workers nationally were earning minimum wage in 2008, a slim 0.4 percent of the American workforce.

“It won’t have any noticeable effect on Indiana University,” IU spokesman Larry MacIntyre said. “We do have some employees who are under $30,000 (per year). But even employees who make $15,000 or $16,000 are above minimum wage.”

Many hourly workers and some employers consider the raise long overdue, especially considering the Indiana wage was a mere $5.15 as recently as May 2007.

“If I was making minimum wage, (the raise) would be a good thing because you can’t hardly make it on minimum wage anymore,” said Larry Webb, owner of Cafe Pizzeria.
Webb said he has always paid his workers more than minimum wage ever since he opened his business years ago, but he said he believes the raise in pay will still have some effect on him.

“The price of everything is going to go up,” he said. “It’s just passing the buck.”
For minimum wage employees working 40 hours per week, the 70-cent addition will amount to $1,456 annually.

But fewer than half the workers earning minimum wage work full-time, or 35 hours per week. The Bureau of Labor Statistics reports 52.5 percent of employees paid at or below the federal minimum wage work part-time. In addition, half of minimum-wage earners are ages 16-24.

“We do have a lot of student employees, and I don’t know if they might be minimum wage. Those would all be part-time,” MacIntyre said. “Each school and department has their own budget for student employees.”

The federal Fair Minimum Wage Act of 2007 scheduled incremental increases from the May 2007 rate of $5.15 for July 2007, 2008 and 2009.

Employers of workers who receive tips must still pay them at least $2.13 per hour on top of their tips. If their tips combined with the employer’s wage of $2.13 per hour fall short of the minimum wage, the employer must make up the difference.

Washington state leads the nation in minimum wage at $8.55 per hour, and Oregon pays second-highest, $8.40 per hour.

– IDS reporters Sara Amato and Nathan Brown contributed to this story.