Minimum Wage Roundup

Several states see January 1 increases

Published in CSP Daily News

OAK BROOK, Ill. -- The federal minimum wage is set to increase from $6.55 to $7.25 per hour July 24, 2009, but with the start of the new year, workers in several states saw increases in their local minimum wages. Among the states were Arizona, Colorado, Connecticut, Florida, Missouri, Montana, New Mexico, Ohio, Oregon, Vermont and Washington.

Arizona

The Industrial Commission took action in September to set Arizona's minimum wage for 2009. Based upon that action, effective January 1, Arizona's minimum wage will be $7.25 per hour. In accordance with [image-nocss] Arizona's Minimum Wage Initiative, the commission is required to adjust the state's minimum wage annually. The increase in the cost of living is measured by the percentage increase as of August of the immediately preceding year over the level as of August of the previous year of the Consumer Price Index or its successor index as published by the Department of Labor or its successor agency, with the minimum wage increase rounded to the nearest five cents.

Based upon the Department of Labor's Consumer Price Index (CPI) for All Urban Consumers for August 2007, the unadjusted 12 months CPI rate ending in August 2008 for "all itemsbCrLf category increased by 5.4%. Using this figure as the adjusting factor, the minimum wage ($6.90) will increase by 37.26 cents to $7.2726. Given the initiative requirement that all increases must be rounded to the nearest five cents, the new minimum wage is $7.25 per hour.

This change means that Arizona's minimum wage in 2009 will continue to exceed the federal minimum wage thru the first half of 2009. In July 2009, the federal minimum wage will rise to its statutory maximum of $7.25 per hour.

Colorado

On January 1, wages for minimum wage and tipped workers increased 26 cents, from $7.02 to $7.28, to adjust for inflation, reported KKTV. Tipped workers, like restaurant wait staff, will see their minimum rise from $4.00 to $4.26. Colorado's minimum wage has jumped 41% since 2006, when the voter-approved constitutional amendment tying it to inflation took effect.

Connecticut

On New Year's Day, Connecticut's minimum wage will increase to $8.00 per hour, said State Labor Commissioner Patricia H. Mayfield. "This 35-cents-per-hour increase is the first part of a two-year increase in the minimum wage. On Jan. 1, 2010, Connecticut's minimum wage will, in accordance with Public Act 08-92, increase to $8.25.bCrLf

Florida

Florida's minimum wage increased to $7.21 an hour on New Year's Day, a jump of 42 cents for about 400,000 workers, said the Associated Press. The increase, which is based on an annual consumer price adjustment, translates to an extra $16.80 for a 40-hour week. The state's minimum wage went up to $6.15 an hour in 2005 after voters had approved a constitutional amendment the previous year. It has now increased another $1.06 since.

The minimum wage applies to all employees in the state who are covered by the federal minimum wage. The current minimum wage represents a 6.2% change in the federal Consumer Price Index for urban wage earners and clerical workers in the South Region for the 12-month period prior to Sept. 1, 2008. In deciding whether the federal or state minimum wage applies, federal law directs that businesses must pay the higher of the two, according to the Agency for Workforce Innovation. The Florida minimum wage will prevail over the federal rate until such time as the federal minimum wage becomes higher than the state rate. The federal minimum wage will increase to $7.25 on July 24, 2009. On this date, Florida employers must increase the minimum wage from $7.21 to $7.25.

Employers of "tipped employees" who meet eligibility requirements for the tip credit under the Fair Labor Standards Act may count tips actually received as wages under the FLSA; however, the employer must pay "tipped employees" a direct wage. The direct wage is calculated as equal to the minimum wage ($7.21) minus the 2003 tip credit ($3.02), or a direct hourly wage of $4.19 as of Jan. 1, 2009.

Missouri

Workers in Missouri are making 40 cents more per hour, reported The Southeast Missourian. In November 2006, voters approved Proposition B, which mandated an increase in the state's minimum wage from $5.15 an hour to $6.15, with an automatic increase each year to keep pace with inflation. Last year, the minimum wage increased to $6.65 an hour. Thursday, it rose to $7.05 per hour. In July, the state's rate will rise to $7.25. For tipped employees, the minimum rate is $3.52 per hour, and the law requires them to pay tipped employees 50% of the minimum regardless even if their tips put them in excess of minimum wage. Those Missouri businesses with yearly gross income of less than $500,000 are exempt from the increase.

The Missouri Department of Labor & Industrial Relations uses the Consumer Price Index as a base for its adjustments. Last fall, the department reported a 6% change in the Consumer Price Index between July 2007 and July 2008.

Robert Bonney, CEO of the Missouri Restaurant Association, called the increase bad for business and prefers the government mandate that businesses pay the same federal $6.55 minimum wage. "Businesses are suffering in this economy, and the restaurant industry is not immune to that," he told the paper. "And on top of that is the increase in the labor costs that affects restaurants. So we're against using the CPI as a way to measure whether we should increase the minimum wage."

He said in addition to possible cuts in labor, restaurant owners may also be faced with reducing or eliminating what they give back to their communities. "Restaurant owners have supported communities in which they operate through sponsorships and discounts to further missions of other worthwhile organizations," Bonney said. "When you have something that causes restaurateurs to be less profitable, it affects the possibility to help their community."

State Senator Jason Crowell (R) said he supports having one minimum wage set on the federal level so that "all states are on a level playing field for wages."

Montana

Montana's minimum wage increased 35 cents from $6.55 per hour to $6.90 per hour effective January 1, reported The Missoulian. More than 70% of Montana voters supported raising the state's minimum wage when they voted in favor of Initiative 151 in 2006. The initiative proposed raising the state's minimum wage to be the greater of either the current state or federal minimum wage. It also added an annual cost-of-living adjustment to the state minimum wage.

Under the previous law, Montana's minimum wage was equal to the federal minimum wage, which was $5.15 an hour with no cost of living adjustment. Montana law requires an adjustment to the minimum wage to be calculated no later than September 30 of each year. The increase is based on any increase in the U.S. City Average Consumer Price Index for All Urban Consumers for All Items from August of the preceding year to August of the year in which the calculation is made. The amount is to be rounded to the nearest five cents.

New Mexico

New Mexico is ringing in the new year with a $1 increase in the minimum wage, reported the Associated Press. The state's minimum wage officially jumped Thursday to $7.50 an hour for most businesses. The governor's office said an estimated 160,000 workers will benefit from the higher wage. In Santa Fe, the city's mandatory minimum wage rose 42 cents to $9.92 an hour. The increase marked the first of what will be yearly cost-of-living increases mandated under the city's living wage ordinance.

Ohio

Some of Ohio's lowest-paid workers received a modest raise January 1, when the state's minimum wage increased from $7 to $7.30 per hour, said the AP. Restaurant servers and others who make tips saw their base pay go from $3.50 an hour to $3.65.

The 4.3% cost of living adjustments are being implemented under a constitutional amendment that Ohio voters approved in 2006. The state minimums apply to businesses that gross more than $255,000 in 2008, or $267,000 in 2009. The federal minimum for smaller businesses and for 14- and 15-year-olds goes from $6.55 to $7.25 an hour in July.

Businesses that have 10 to 20 employees are particularly affected by the increase, said Carol Nelson, a Marion-area human resources consultant who has approximately a dozen clients in Marion, Crawford and Morrow counties, as well as the Columbus area. "I'm seeing three responses," she said. "Either they're having to cut staff to afford the increases or they're making the mandatory increases they have to to minimum wage, which is cutting money available for increases to other staff, or they're offsetting it by reducing benefits." She said two clients who traditionally had offered health insurance to employees will halt that practice as of January 1 as a result of the minimum wage hike.

Roger Geiger, executive director of the Ohio chapter of the National Federation of Independent Business, which represents more than 25,000 independent, family-owned and operated small businesses in Ohio, said some small-business owners facing higher payroll costs likely will cut jobs.

Oregon

A 45-cent-an-hour increase brought Oregon's minimum wage to $8.40 an hour beginning January 1, said AP. Michael Leachman, policy analyst with the Oregon Center for Public Policy, said this means an additional $936 a year for a full-time minimum-wage worker. The adjustment reflects the rise in the cost of living and was required by a voter-passed measure in 2002. Under the higher minimum an Oregon full-time minimum wage worker will earn $17,472 next year.

Vermont

Vermont's minimum wage rose from $7.68 to $8.06 per hour on January 1, reported The Burlington Free Press, giving full-time minimum wage workers a $791 raise this year. Vermont's minimum wage is one of the highest in the country and will be $1.51 an hour above the federal minimum until July 24, when the U.S. hourly rate increases from $6.55 to $7.25. The state's minimum wage increases at the same rate as the August Consumer Price Index or 5%, whichever is less. The inflation index increased 5.4%. So, the minimum wage increase was set at 5%.

Vermont is one of 10 states that automatically increase minimum wages. State legislators approved an annual cost of living increase in 2005.

The wage for tipped employees increases from $3.72 to $3.91 per hour. Tipped employees' total earnings must equal or exceed $8.06 per hour. If a combination of tips and the basic wage fall short of that requirement, the employer makes up the difference.

Washington

An increase in Washington state's minimum wage will see workers' pay go up to $8.55 an hour, said The Seattle Times, the highest in the United States. That is 48 cents an hour more than they had been making, representing their single biggest pay raise in nine years, said the report.

Previously at $8.07, the state's minimum wage now is at $8.55 an hour because of an initiative that voters approved in 1998 to adjust the rate upward each year based on inflation. State law allows 14- and 15-year-olds to be paid 85% of the minimum wage, or $7.27.

The new rate represents an annual paycheck of $17,784 for full-time, minimum-wage workers, a 5.9% increase from last year. It is pegged to the federal Consumer Price Index, which rose 5.9% during the 12 months that ended August 31.

About 2.5% of the state's work force, roughly 57,000 workers, earned the minimum wage in 2007, the most recent year for which data from the Employment Security Department is available, the report said. Restaurants, retailers and farms are the primary employers of minimum-wage workers.

The Washington Restaurant Association calculates that an eatery with 12 full-time employees will spend $11,980 more on payroll this year, excluding taxes, because of the minimum-wage increase.

Click herefor state minimum wage laws.