2012 Brings a Minimum Wage Increase for Workers in 8 States—Especially Women

Here’s a little bit of good news for the new year: more than one million low-wage workers got a raise on January 1, when the minimum wage increased in the eight states that index their minimum wage for inflation. In each of these states (Arizona, Colorado, Florida, Montana, Ohio, Oregon, Vermont, and Washington), women make up a majority of the workers who will see their paychecks increase this month.  An adjustment for inflation also increased the minimum wage in San Francisco to $10.24 per hour, making it the first large city in the country to require hourly pay above $10.

However, these jurisdictions represent the exception rather than the rule. While another 10 states, the District of Columbia, and some other localities have minimum wages that are set higher than the federal minimum wage, most of their minimum wage rates are fixed and don’t keep pace with inflation. The minimum wage is still below $9.00 an hour in every state but Washington (where it just rose to $9.04/hour). Worst of all, in more than half the states, the minimum wage remains at the federal level, which is just $7.25 an hour.

As the New York Times editorial page highlighted, it’s past time for the federal government to set a higher standard for the states. A woman working full time, year round at the current federal minimum wage will earn just $14,500 annually – that’s more than $3,000 below the federal poverty line for a mother with two children. The value of the federal minimum wage has declined over time; if it had kept pace with inflation since 1968 (when the wage was at its highest mark), it would now be $10.39 per hour. The federal minimum wage for tipped workers is lower still; since 1991, it has been set at just $2.13 an hour, providing an annual base wage of only $4,260 for tipped employees working full time, year round.

Raising the federal minimum wage and the tipped minimum wage would make a real difference for women, boosting their incomes and the economy at large while helping to close the wage gap:

• In 2010, women made up about two-thirds of all workers earning minimum wage or less. Approximately 70 percent of tipped employees are women.
• Increasing the minimum wage to $10 per hour would boost the earnings of a woman working full time, year round to $20,000, an increase of $5,500 per year. These wages are modest, but enough to pull a family of three out of poverty.
• Because minimum wages go to families with lower incomes, this money is often immediately spent, boosting the economy. Research shows that for every $1 added to the minimum wage, low-wage worker households spent an additional $2,800 the following year.
• Since women are the majority of tipped and minimum wage workers, increasing the minimum wage and the tipped minimum wage would mean higher pay for millions of women, helping to close the gap between women’s and men’s median wages. In 2010, women working full time, year round were paid only 77 cents for every dollar paid to their male counterparts.

Congress will soon return to work. Along with a long-term extension of federal unemployment insurance, an increase in the federal minimum wage is a critical part of a jobs agenda that will help workers struggling to make ends meet and begin to rebuild an economy that works for all Americans.