Sue Errington Applauds Minimum Wage Increase
INDIANAPOLIS, IN - A law that will lead to an increase in Indiana’s minimum wage and give approximately 37,000 Hoosiers a raise goes into effect on July 1.
Public Law 165 (House Enrolled Act 1027), which was signed by Governor Mitch Daniels May 4, ties Indiana’s minimum wage to the federal rate. Recently a law approved by Congress and signed by President Bush increases the minimum wage to $7.25 per hour in a three step process. Each step will increase the rate by 70 cents with the first increase, to $5.85 an hour, becoming effective July 24. The next increase, on July 24, 2008, will raise the rate to $6.55 while the last increase in July of 2009 will bring it to $7.25 per hour.
The federal minimum wage law includes employees of companies with revenues of at least $500,000 a year, small businesses engaged in interstate commerce, domestic workers as well as employees of federal, state, or local government agencies, hospitals and schools. Indiana’s law applies to employees not covered by the federal statute and employers with two or more employees.
At the current state and federal minimum wage of $5.15 an hour, a full-time worker makes about $10,700 a year. At $7.25 per hour, that annual salary increases to about $15,000. This will be the first increase since 1997.
Some states did not wait for the federal government to act on the issue. By the first of 2008, 31 states and the District of Columbia will have minimum wage levels greater than the current federal level of $5.15. Three of those states, Kentucky, Iowa and New Mexico, enacted legislation to make that change just this year.
“Once you adjust for inflation, the present value of the minimum wage, $5.15, is at its lowest level since 1955,” said Errington. “Our national economy has obviously grown since then, and our federal and state minimum wage levels should reflect that. I hope that this change can help provoke a discussion about the need to pay our workers a true living wage that adequately supports families.”
According to a 2006 Fiscal Policy Institute study, states with higher minimum wages saw stronger job growth in small businesses than states with the $5.15 rate. In fact, the study reports that “the number of small businesses across the economy with fewer than 50 employees grew by 5.4 percent from 1998 to 2003 in the higher minimum wage states, compared to a 4.2 percent increase for the balance of the states.”
Similarly, a study released by the Economic Policy Institute in 1998 proved that the federal minimum wage increases in 1996 and 1997 led to increased worker productivity, reduced training and recruiting costs and improved employee attendance and morale.
Source: Sue Errington Press Release. For more information on Sen. Errington, her legislative agenda or other State Senate business call 1-800-382-9467 or visit www.senatedemocrats.IN.gov.
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Sue Errington
Of course she applaudes the wage increase; she's not a business owner.
It starts with things like Seat Belt Laws and before you know it, the government is telling you how much you have to pay your employees. Doht! Too late!
Surely one must see the irony in having a "free-market-economy" with minimum wages.