Lewis Applauds Indiana Minimum Wage Increase

“According to estimates from the U.S. Census Bureau, over half of the counties included in my district have poverty levels that are above the state average,” said State Senator Jim Lewis (D-Charlestown). “More than half of the Hoosiers earning minimum wage are adults, many of whom are supporting a family on their own.”

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.

Lewis said that a common misperception is that an increase in the minimum wage will hurt small businesses. Reports have shown that states with higher minimum wages saw stronger job growth in small businesses than states with the $5.15 rate.

According to a 2006 Fiscal Policy Institute study, “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.