I hadn’t given much thought to the federal minimum wage lately until I read a bit of the Economic Analysis of the Arizona Minimum Wage Proposal put out by the Political Economic Research Institute (PERI) which indicated that if someone worked for 52 weeks at the federal minimum of $5.15 per hour, their annual income would be just $10,712 or 32 percent below the 2005 federal poverty level for a family of three. This is a non-livable minimum wage.

This same piece went on to say that since January 2001 non-supervisory wages have grown by a mere 1.6 percent while the productivity of these same workers has increased by more than 20 percent.

Where did we go wrong?

On the one hand, employees are expected to work hard for a minimum wage which barely pays rent or buys food. On the other hand, employers complain that raising the minimum wage would cost them too much, result in lay offs and require them to raise prices that the new minimum wage probably would still not support.

Is raising the minimum wage a waste of time?

Dollars & Sense recently indicated that opponents of raising the federal minimum wage (by the way, 23 states have set their own minimums) claim there would be a ripple effect in that if you raise the wages of the lowest paid then those at the next level will require a raise to keep up.

Apparently, the Economic Policy Institute (EPI) is one of the groups who feels increasing the minimum wage is the wrong approach because it puts “low-skilled adults out of work and (has) no impact on poverty.”

What’s their solution?

“Instead of raising the minimum wage, Congress can have a real impact on the lives of low-income Americans by supporting an expansion of the Earned Income Tax Credit [EITC]. Unlike minimum wage hikes, the EITC effectively targets benefits to those in need without jeopardizing jobs.”

Whatever your viewpoint, there is change on the horizon.

Recent reports indicate that the U.S. House of Representatives and the Senate have approved a bill to increase the federal minimum wage to $7.25 over a period of 26 months although there are differences between the versions of the bill.

This entry was posted on Friday, April 27th, 2007 at 10:30 am and is filed under Job Satisfaction, Equal Opportunity. You can subscribe via RSS 2.0 feed to this post's comments. You can comment below, or link to this permanent URL from your own site. Your comments will appear immediately, but I reserve the right to delete innapropriate comments.