Being that I manage HR where I work, I get to see all the "news" about minimum wages (both in the state and federal). Our State's minimum wage has always freaked me out at how high it has gotten, but the current changes in FEDERAL minimum wage has me down right fearful.
Why? Because it is now becoming a living wage. Either companies will quit hiring non-skilled workers (where will they work?) or they will start using their non-us factories more.
If you don't know the amounts, don't worry, I'm about to give you the stats.
In 1997, the Federal (don't confuse this with your States, which you may not even have, or it may be higher) the minimum wage was set at $5.15. As of July 24th of this year, it was raised to $5.85. No big deal- that's only a bit over 13% over the course of 10 year. Now, this is where I start to worry- the *second* step will raise the minimum wage to $6.55 on July 24, 2008 (12% over ONE year) and the Third step will raise the minimum wage to $7.25 on July 24, 2009 (10% more).
Now, I don't know about you, but I doubt that I will see raises like that during that time. However, you can bet that cost of living will rise since it will cost business more to employ unskilled workers.
I always looked at minimum wage as the wage that you paid people that were doing completely unskilled jobs (bagging groceries, stocking shelves, collecting carts, making photocopies, packing boxes, etc.) ~$5.50 an hour seems like a good pay for that type of labor. But $7.25???? That's not minimum, that is "living".
When I started the job that I have now, I started out answering phones, taking orders, doing data entry, shipping orders and managing the office. I made $7.00 an hour, and I had a lot of responsibility.
What is $7.00 per hour, anyway? It is $14,560 per year. After tax, that is $11,503, which is $958 per month. Can you live on it? You bet....
This is what my living cost me back then (1995) per month:
apartment: $410
car payment: $120
Insurances: $110 (car and renters)
food: $175
phone: $30
Gas: $40
Misc.: $25
Total: $910 - $48 to spare- that's what I got for being over minimum wage!
Yep, it was tight, but it covered my NEEDS (something that a lot of Americans seem to have a hard time separating from "wants").
So, what about $7.25 an hour 12 years later?
That's $15,080 per year. After taxes: $11,914 (per month: $993)
Same Apartment: $470 (checked on their rates to have the actual number)
car payment: $120
Insurances: $115 (car and renters)
food: $175
phone: $30 (except now it would be mobile!)
Gas: $55
Misc.: $25
Total: $990 - only $3.00 left over- but needs are still paid for...no skills required.
Now, before somebody says "but,that can only support one person!" I shall say- it's meant to. If you have a couple- both of you will have to work, and will be better off (rent won't be higher, as an example). Have a kid? Alternate shifts. Sure, it isn't ideal, but it will pay the bills.
So, we no longer have a real minimum wage- we actually have a living wage. One that many will find "good enough" and never strive to do better. Does this help our country in any way? I don't think so. I think it will hurt it in many ways, especially if this trend continues.