Minimum wage milestone: Why Washington State surpassed $9 an hour
Minimum wage laws raised the wage floor in eight states as of Jan. 1. Washington now tops all states, at $9.04 an hour. Economic effects of raising the minimum wage are in hot dispute.
Low-wage earners have a little more to celebrate this new year, at least in eight states.Skip to next paragraph
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In those states, 2012 means a higher minimum wage, under laws that peg the wage floor to inflation. The increase makes Washington the first state to set its minimum wage higher than $9 an hour.
Why Washington? Why now?
Simple. Washington pegs its minimum wage to the consumer price index, says Paul Sonn of the National Employment Law Project. That means whenever the cost of living increases, so does the minimum wage there.
Nine other states do the same. (One of them, Missouri, opted for no change this year, and Nevada's increase won't kick in until midyear, leaving eight states where the minimum wage rose as of Jan. 1.) But Washington has been using that CPI-based formula since 2001, longer than any other state, and that's why its hourly wage is highest.
Of course enacting such a law is difficult. Most states that have laws tying minimum wages to the consumer price index have done so via ballot initiatives. This keeps the political football out of politicians' hands and gives it to voters, who mostly feel that raising the minimum wage as consumer prices increase is a good idea, says Mr. Sonn.
The new minimum wage laws, which also took effect Jan. 1 in Arizona, Colorado, Florida, Montana, Ohio, Oregon, and Vermont, will increase paychecks for more than 1 million workers, according to the Economic Policy Institute (EPI).
In addition, another 394,000 workers will be indirectly affected by the increase. These workers are likely to also see a wage increase, as employers adjust their overall pay structures to reflect the new minimum.
The amount of increase per state ranges from $0.28 an hour in Colorado to $0.37 in Washington. New minimum wages in the eight states now are set between $7.65 an hour and $9.04 an hour, according to EPI. As a result, minimum-wage workers in Arizona will see an average of $298 more in their paychecks this year. In Oregon, the increase is $538.
The current federal minimum wage is $7.25 an hour, which might not sound bad for a typical high school-age minimum-wage worker. But as it turns out, minimum-wage workers are not typically high school kids. According to data from the Labor Department, 80 percent of minimum-wage earners are older than 20. And about 60 percent of minimum-wage workers are female, even though women make up only 48 percent of the national workforce.
Effects on the broader economy as a result of raising the minimum wage are hotly disputed.