The Impact of the Federal Minimum Wage Increase on States

Most employers nationwide felt barely a blip when the federal minimum wage increased on July 24, 2007 from $5.15 to $5.85 an hour. That’s because most employers run their business out of one of the 30 states and the District of Columbia that already had minimum wage rates higher than $5.85 an hour.

But the number of states with higher minimum wage rates will decline as the new federal minimum wage increases to $6.55 next year and to $7.25 in 2009. Unless states change their minimum wage laws, only around 20 states will be above the federal minimum wage in July 2008 and around 11 will be above in July 2009. (You can pretty much count on a number of states continuing to change their laws over the next couple of years, though).

Many of the states with higher minimum wages increased them in the last couple of years when attempts to raise the federal minimum wage were being held up in Congress. States that currently have a higher minimum wage than the new federal minimum wage of $5.85 an hour are:

Alaska ($7.15); Arizona ($6.75); Arkansas ($6.25); California ($7.50); Colorado ($6.85); Connecticut ($7.65); Delaware ($6.65); District of Columbia ($7.00); Florida ($6.67); Hawaii ($7.25); Illinois ($7.50); Iowa ($6.20); Maine ($6.75 — will increase to $7.00 on October 1, 2007); Maryland ($6.15); Massachusetts ($7.50); Michigan ($7.15); Minnesota ($6.15) (for employers with annual receipts of $625,000 or more; $5.25 for employers with annual receipts of less than $625,000 — if these employers are covered by the FLSA, they must comply with the increased minimum wage rate); Missouri ($6.50); Montana ($6.15) ($4.00 for employers with $110,000 or less in gross annual sales); Nevada ($6.33) (for employers that do not provide health benefits); New Jersey ($7.15); New York ($7.15); bla bla bla, are you still reading this list?; North Carolina ($6.15); Ohio ($6.85); Oregon ($7.80); Pennsylvania ($7.15); Rhode Island ($7.40); Vermont ($7.53); Washington (7.93); West Virginia ($6.55); and Wisconsin ($6.50).

Clearly, more employers will feel the effect of the next two increases scheduled over the next two years, since those rates will be higher than many state minimum wage rates.

Keep in mind, even where you are covered by the state minimum wage because it is higher, if you are an FLSA-covered employer you need to post the new federal minimum wage poster in addition to your state minimum wage poster. This last paragraph brought to you by Poster Guard Compliance Protection.


1 comment:

SocialButterfly said...

Oh, that last paragraph is good to know. I didn't realize I had to update my federal poster since my state's minimum wage is higher. The government sure makes it confusing!


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