By Bowdeya Tweh and Keith Benman
The Times (Munster, Indiana), Distributed by McClatchy-Tribune Business News, July 24, 2009
Indiana's minimum wage is set to increase 70 cents per hour today, as the federal standard for what employers can pay their workers also increases.
The minimum wage, which rises to $7.25 from $6.55 per hour in Indiana, is part of the third installment of three scheduled annual increases agreed on in 2007. The first increase on July 24, 2007, hiked the federal minimum wage 70 cents to $5.85 per hour, according to the U.S. Labor Department.
Indiana and 10 other states peg their minimum wage to the federal standard. The standards affect firms with more than two employees with certain exceptions.
Illinois' $8 minimum wage will increase to $8.25 on July 1, 2010, which affects employers with four or more workers, excluding family members.
A worker earning $7.25 per hour at a 40-hour-per-week job for 50 weeks would earn $14,500 before taxes. In Illinois, a worker earning $8 per hour in similar circumstances would earn $16,000 before taxes.
Indiana Department of Workforce Development spokesman Marc Lotter said of the 1.8 million Hoosiers working hourly, Indiana had 64,000 workers earning at or below the federal minimum wage.
The increase amounts to an extra $28 grossed per paycheck in a 40-hour work week. Connie Lile, 59, works as a switchboard operator at the WorkOne center in La Porte, and she is glad for the minimum-wage increase even as a part-time worker.
Lile, who said she moved back to the region after being diagnosed with chronic lymphocytic leukemia, said jobs are hard to come by in this economy. She gladly took her current job three months ago knowing some money was better than nothing. Lile got her job through Experience Works, a program that operates in 34 states and Puerto Rico and helps people ages 55 and older get training and return to the work force.
"I can't see it causing that much of a problem," Lile said. "It's not that much. These guys need to come out of these high towers and try to live on minimum wage and see what they think about it."
John Barney, owner of several Wendy's restaurants in the region, called the increases over the years "significant."
Hardly any employees at his Wendy's restaurants were affected by the first minimum wage increase two years ago, because most were making more than the minimum wage, Barney said. But as the wage floor has been lifted, that is no longer the case at his restaurants. He expects Friday's increase to affect his company's bottom line.
His Wendy's restaurants will have to consider increasing prices, which can lead to a decrease in business, which can lead to fewer hours worked for employees, he said.
Barney said he has always been in favor of supply and demand determining the price of labor without the federal government getting involved.
"A wage of $7.25 in a place like New York City is not much," he said. "But in certain parts of the Midwest, that's above the market."
The National Federation of Independent Business said it was against increasing the federal minimum wage because mandatory increases hurt small businesses and their employees.
"Big corporations do not have to absorb the cost because most minimum-wage jobs are offered by small businesses," a statement on its Web site said. "It has not been proven to reduce poverty or narrow the income gap and puts a stranglehold on America's top job creators: small businesses."
Gary Community School Corp. spokeswoman Sarita Stevens said the higher minimum wage would affect the school system's budget, but it benefits the people working, because they would bring more money home.
Stevens said most of the minimum-wage positions are part time and include lunchroom matrons, bus attendants and parent assistants.
Boston-based Business for Shared Prosperity issued a news release welcoming the minimum-wage increase and said it had support for the increase from business owners and executives from around the country.
The release said the minimum wage was stagnant between 1997 and 2007, which was the longest period in history without a raise. The group also said even with the raise to $7.25, workers will still make less than the $7.86 they made in 1956 -- adjusting for inflation.
About the minimum wage According to a Consumer Price Index inflation calculator, the federal minimum wage of $4.75 in 1996 has the buying power of $6.53 in 2009.
Copyright (c) 2009, The Times, Munster, Ind.