The federal minimum wage has been $7.25 an hour since mid-2009, the last time that part of the Fair Labor Standards Act was amended.
The national law has no provision for automatic increases because of time or inflation.
Thus, the buying power of $7.25 is now 35 percent below the buying power of the federal minimum at its 1968 peak. To maintain the same purchasing power, the minimum would have been $11.10 this year.
“It’s too often forgotten that employees are also consumers,” said Mike Draper, owner of Raygun LLC in Kansas City and a member of a national business leadership group that supports minimum wage increases. “When they earn more, demand for products goes up” — an overall benefit to the national economy.
Other business owners and operators disagree. They say being forced to pay their entry-level workers more would increase overall payroll costs and force them to raise consumer prices or cut jobs, hurting the most vulnerable workers.
As the minimum wage disagreements carry on, most economists and labor-advocacy groups see economic merit in an increase. But Congressional action in 2017 is unlikely, as it has been for seven years. Many states and municipalities have taken superseding action, though.
The U.S. Department of Labor says that “in cases where an employee is subject to both the state and federal minimum wage laws, the employee is entitled to the higher of the two minimum wages.”
In Missouri, for example, an inflation adjustment built into state law will give covered workers an automatic increase to $7.70 an hour from $7.65 on Jan. 1.
Along with Missouri, these states have previously legislated indexing that will cause their 2017 minimums to rise: Alaska to $9.80; Florida to $8.10; Montana to $8.15; New Jersey to $8.44; Ohio to $8.15; and South Dakota to $8.65.
Draper said Missouri’s nickel increase will help a bit, but “it’s not enough to make ends meet,” and that’s why he lists himself among business representatives who have signed a Business for a Fair Minimum Wage statement that calls for raising the federal minimum to at least $12 an hour by 2020.
That’s a more modest demand than that of the Fight for $15 movement. And it’s more in line with most of the wage increases mandated in states and cities. (The federal law applies in Kansas.)
Here are new state-level minimum wages authorized this year that will be effective Dec. 31, or Jan. 1:
▪ Arizona: $10, with increases to $12 by 2020 and cost-of-living indexing starting 2021.
▪ Arkansas: $8.50.
▪ California: $10.50, with increases to $15 by 2022, with an extra year for businesses with 25 or fewer employees to comply.
▪ Colorado: $9.30, with increases to $12 by 2020 and indexing starting 2021.
▪ Connecticut: $10.10.
▪ Hawaii: $9.25, with an increase to $10.10 in 2018.
▪ Maine: $9, with increases to $12 by 2020 and indexing starting 2021.
▪ Massachusetts: $11.
▪ Michigan: $8.90, with an increase to $9.25 in 2018.
▪ New York: $9.70, with increases to $10.40 in 2017, $11.10 in 2018, $11.80 in 2019, $12.50 in 2020, and indexing starting in 2021 to get to $15.
▪ Vermont: $10, with an increase to $10.50 in 2018 and indexing starting in 2019.
▪ Washington: $11, with increases to $13.50 by 2020 and indexing starting in 2021.
Other states have these increases scheduled to take effect July 1: Maryland , $9.25; Oregon, between $10 and $11.25 depending on location in the state; and Nevada, subject to indexing.
In addition, dozens of cities and counties have set new wage floors, many of them higher than their state mandates and many targeting $15 an hour by 2020.