Cox News Service: Minimum wage increase takes first jump

By Mike Kelly
Cox News Service, 7/24/07

WASHINGTON - A hike in the federal minimum wage went into effect on Tuesday for the first time in ten years, ending the longest stretch without such an increase since the minimum wage was enacted in 1938.

The minimum wage rose 70 cents, from $5.15 an hour to $5.85 an hour. This wage raise is the first of three scheduled to take effect over the next two years.

"After ten long years, minimum wage workers are getting the pay increase that they need and deserve," said Rep. George Miller, D-Calif. "Thirteen million Americans will be able to better provide for their families because of action taken by this Democratic Congress to raise the minimum wage."

The Fair Minimum Wage Act of 2007, which was written by Miller, raises the minimum wage from $5.15 to $7.25 in equal portions over two years. On July 24 of 2008, the minimum wage will increase to $6.55, and on July 24, 2009, it will increase to $7.35.

From 1997 to 2006, the Republican controlled Congress chose not to enact new minimum wage legislation. The minimum wage purchasing power reached a 51-year low in 2006.

"In the wealthiest country in the history of the world, it is an outrage that anyone who works full-time would still wind up in poverty," Miller said. "Everyone who puts in an honest day's work should receive a fair day's pay. That's why, as a first step, this minimum wage increase is so urgently needed."

The legislation also applied the minimum wage hike to the Commonwealth of the Northern Mariana Islands, a U.S. territory in the Pacific Ocean.

Many business representatives from around the country are critical of the decision. The National Restaurant Association has been one of the biggest critics.

"The minimum wage increases of 1996 and 1997 cost the industry more than 146,000 jobs and postponed operators' plans to hire an additional 106,000 employees," the association said in a statement. The increase, it said, will have a greater impact on smaller, independent restaurants in small communities.

The association predicted that the new minimum wage would likely lead to higher menu prices, elimination of some jobs and a reduction of staff hours.

Other business owners are embracing the wage raise. The chief executives of businesses such as Costco and Addus Health Care are among those claiming that a raise in the minimum wage will not hurt their businesses' bottom lines. According to Small Business Majority, a coalition of U.S. small business owners, two out of three small business owners nationwide supported the minimum wage increase.

"Most business leaders recognize that we need to focus our energies in building a strong, competitive 21st century economy that creates the jobs of the future," said John Arensmeyer, CEO of Small Business Majority. "A minimum wage that promotes stability and economic prosperity is a necessary component of progress."

Proposals to further increase the minimum wage remain likely. Holly Fechner, former policy director for Sen. Ted Kennedy, D- Mass., said that she is certain Kennedy will put forward a bill shortly. She said other measures could include indexing the minimum wage.

"Because it has become political football, it may make more sense to peg it to inflation or some other index so that once Congress enacts this, it will be increased automatically," Fechner said.

For now, Democratic lawmakers and minimum wage advocates are celebrating. Hundreds of supporters joined Sen. Harry Reid, D-Nev., and Rep. Nancy Pelosi, D-Calif., on the lawn of the Capitol Tuesday in honor of the wage increase. Both advocates and lawmakers noted that the fight is far from over.

"We will continue to make the case that raising the minimum wage is a central moral and economic issue of our time," said the Rev. Paul H. Sherry, founding national coordinator for the Let Justice Roll Living Wage Campaign. "Morality demands that a job should keep you out of poverty, not keep you in it."

Copyright 2007 Cox News Service

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