Increase may be below minimum of what’s needed
Workers across the country at the bottom of the pay scale saw their paychecks increase July 24. While their paychecks remain small, the 70-cent per hour bump ‘ the first of three over the next two years ‘ is better than nothing, according to proponents.
The pay hike increased the minimum wage from $5.15 per hour to $5.85. Next July, the minimum wage will jump to $6.55 and then to $7.25 in July 2009. The increase is the first for Hoosiers since the federal minimum wage increased to $5.15 in 1997.
‘This change will impact 37,000 Hoosier workers now earning $5.15 or less as well as those who earn slightly more than minimum wage but still less than the national poverty level,’ State Sen. Richard Young, D-Milltown, said.
The Indiana Legislature earlier this year considered bumping the minimum wage to $7.50, but instead chose to tie Indiana’s rate to the federal minimum wage, which was approved by Congress and signed into law by President Bush this past spring.
Indiana, however, is in the minority, as 30 states and the District of Columbia exceed the current $5.85 federal minimum wage. The minimum wages of neighboring states are like those of rest of the country ‘ varied. While Kentucky’s is the same as the federal rate, those in Illinois, Michigan and Ohio are higher, with Illinois, set to increase its to $8.25 in July 2010, leading the way.
Just how meaningful the increase will be, especially since it is being implemented in three phases over two years, is questionable. A full-time employee in Indiana making the old minimum wage earned $206 per week. As of July 24, that person makes just $18 a week more, before taxes. Once the final increase is implemented in July 2009, that person’s weekly income will jump to $290 per week, or $4,368 more per year than what they earned at $5.15 per hour.
Shirley Raymond, executive director of Harrison County Community Services, said the increase, which is the first in 10 years, is welcome but it will still leave many struggling to make ends meet.
‘Of course it will help, but, by the same token, it will nowhere keep with the (cost of living),’ she said.
Raymond shortly before the July 24 increase took effect said HCCS often sees families with two adults working two jobs just to stay afloat financially.
Raymond said she doesn’t know exactly how much the minimum wage needs to be increased to have a substantial effect, since people have different needs and can live on varying incomes.
‘It’s almost a case-by-case scenario,’ she said.
According to the living wage calculator provided by the Poverty in America Web site (www.povertyinamerica.psu.edu), the current minimum wage falls below the living wage ‘ the hourly rate needed to support a household ‘ in Harrison, Crawford and Floyd counties.
The living wage per Crawford County household is: one adult, $6.62; one adult, one child, $12.56; two adults, $9.65; two adults, one child, $14.54; and two adults, two children, $18.53.
Even if both parents in a two-child household earn $7.25 ‘ the top amount the minimum will increase to ‘ the household will still be more than $4 below the living wage.
Floyd and Harrison counties have the same living wage, and while it is slightly less than Crawford County, it is also higher than the minimum wage.
The living wage in Harrison and Floyd counties is: one adult, $6.42; one adult, one child, $12.44; two adults, $9.57; two adults, one child, $14.42; and two adults, two children, $18.43.
According to the Economic Policy Institute, five percent of the workforce, some 6.6 million employees, earn less than $7.25 per hour. The EPI claims that another 8.3 million workers, or six percent of the workforce, who earn just above $7.25 would also likely see their wages increases due to spillover effects.
However, according to the U.S. Bureau of Labor, less than three percent of workers in 2005 made at or below the minimum wage and the majority of those were part-time employees, with a significant portion between ages 16 and 19.
That doesn’t mean that there aren’t adults who are struggling to support themselves and their families. Raymond said HCCS’s numbers are up this year compared to recent years. Besides helping more people, she has noticed that households are moving in with each other to cut down on expenses in an effort to make ends meet.
‘Three households have moved in together to try to make it,’ she said.