The federal minimum wage increases today to $7.25 per hour. The increase is expected to boost the wages of about 4.5 million workers nationally, providing an additional $1.6 billion annually in increased wages. In Wisconsin, the increase will boost the wages of an estimated 196,000 workers. Nationally, about one-fourth of the people whose wages will increase are parents (24.7%), and slightly over three-fourths are age 20 or older.
As the Center on Wisconsin Strategy (COWS) noted in a short paper issued yesterday, increasing the minimum wage helps stimulate the economy: “Low-wage workers spend most of what they earn. As a result, increasing the minimum wage boosts the aggregated demand for goods and services in the economy.”
The July 24 increase is the final step of a three-step increase passed by Congress in 2007 when the minimum wage was only $5.15. Despite the $2.10 increase in the minimum wage over that period, the inflation-adjusted value of new federal minimum is still less than the minimum wage during most of the period from 1961 to 1981.
The COWS paper also notes that a proposal in the state legislature would increase the state minimum to $7.60 and index it annually to inflation. That would raise wages for about 316,000 workers and would boost their spending by about $108 million. Indexing the minimum wage, as 10 other states have done, would ensure that it keeps pace with prices for low-wage workers and would also reduce employers’ uncertainty regarding future labor costs.
