Minimum Wage Increase
Democrats are building an economic approach that lifts every American, not just the privileged few. The average American CEO earns more before lunchtime in one day than a minimum wage worker earns all year. This is not the kind of America we want our children to grow up in.
On July 24th, Americans received the second step of Democrats' minimum wage increase. Last year, the New Direction Congress enacted the first minimum wage increase in a decade – which is being implemented in three steps. The minimum wage now rises to $6.55 an hour, and will rise to $7.25 next year. The previous Republican-controlled Congresses blocked minimum wage proposals from being considered. In 2006 alone, Republicans blocked minimum wage legislation from coming to a vote 11 times. The minimum wage increase passed by the Democratic-led Congress is the first pay raise for working Americans in almost 10 years. This raise is part of our New Direction towards shared prosperity, and is a down payment on a broader American agenda for working families.
A Look at How Raising the Minimum Wage Helps America’s Families
- In May 2007, Congress enacted the first minimum wage increase in a decade. The legislation increased the minimum wage from $5.15 to $7.25 an hour over two years. The minimum wage had been frozen at $5.15 an hour since 1997.
- Under the legislation, the minimum wage increased from $5.15 to $5.85 on July 24, 2007; will increase to $6.55 on July 24, 2008; and will increase to $7.25 on July 24, 2009.
- Raising the minimum wage to $7.25 over two years will provide an additional $4,400 per year for the families of minimum wage workers.
- 12.4 million workers will benefit from the increase to $7.25 – 5.3 million directly and 7.1 million indirectly as a result of a new wage floor – as well as more than 6 million children of low-wage workers.
- Of the 12.4 million workers who will benefit from the increase to $7.25, 7.6 million are women, 3.1 million are parents, and 4.6 million are people of color. [Economic Policy Institute, 7/08]
- It is wrong to have millions of Americans working full-time and year-round and still living in poverty. At $5.85 an hour, a full-time minimum wage worker still brings home only $12,168, well below the 2008 federal poverty level of $17,600 for a family of three. Americans who work hard and play by the rules should earn enough to be able to provide for their families.
- A minimum wage increase is particularly important at a time when America’s families have seen their real income drop by nearly $1,000 since 2001, while the costs of gasoline, food, and health care have skyrocketed.
- The 25 states in which wages will actually be raised this year (because their state wage is not already higher) are AL, AR, GA, ID, IN, KS, LA, MD, MN, MS, MT, NC, ND, NE, NH, NM, OK, SC, SD, TN, TX, UT, VA, WI, and WY.
- There are also 12 other states where workers will benefit from the minimum wage increase legislation, because they will benefit from the increase to $7.25 in July 2009. These 13 states are: AK, AZ, CO, DE, FL, MI, MO, NV, NJ, NY, OH, and PA.
It is wrong to have millions of Americans working full-time and year-round, yet still living in poverty. The previous minimum wage of $5.15 an hour was simply not enough to cover the needs of the average family as they struggle with increasing costs of child care, education, health insurance, and gasoline prices. Before the increase in July 2007, the value of the minimum wage had dropped to its lowest level in over half a century. Working full time, a minimum wage worker brought home only $10,712 a year, nearly $6,000 below the poverty level for a family of three. Raising the minimum wage in 2007 meant a $4,400 yearly pay raise—money that could pay for 15 months of groceries, or more than two years of health care. It could buy 19 months of utilities, 20 months of child care, or 30 months of college tuition at a public, 2-year college.
Watch a video of House Democratic Leaders and workers across the country on the first minimum wage increase in July 2007:
On July 24, 2007, the minimum wage went from $5.15 to $5.85 an hour, and on July 24, 2008 it will increase to $6.55 an hour. In 2009, it will increase to $7.25 an hour. Thanks to this increase, in 2009 a family of four will move from 11 percent below the poverty line to 5 percent above the poverty line. Nearly 13 million people will benefit from the increase. The minimum wage increase will have a direct positive impact for:
Women. Almost 60 percent of the 13 million workers who will benefit from a minimum wage increase are women.
Minorities. Forty percent of those who will benefit are people of color.
Families. Families with affected workers rely on those workers for more than half of their family’s income. 6.4 million children will see their parents’ income rise.
Military Families. 10% of military spouses earn between $5.15 and $7.25 per hour. 50,000 military families will benefit from an increase in the minimum wage to $7.25 per hour.
Raising the minimum wage is essential to the security of America’s families and children. The new Democratic-led Congress is delivering on our priorities for working families through the minimum wage increase; it is an initial step towards our broader agenda that prioritizes working Americans.
Learn more about the minimum wage increase from the Education and Labor Committee>>
Read the about the July 2007 minimum wage events in The Gavel>>
Speaker Pelosi: Increase in Minimum Wage Signals a New Direction in Our Country>>- Recovery Rebates to jumpstart the economy and help Americans with rising costs;
- Extended unemployment benefits for 3.5 million Americans;
- The first minimum wage increase in a decade;
- The largest college aid expansion since the GI Bill in 1944, including cutting the interest rate on federal subsidized student loans in half;
- A tax cut for 19 million middle-income Americans facing the AMT;
- Steps to cut gas prices, including temporarily suspending deposits in the Strategic Petroleum Reserve, the first new vehicle mileage standards in 32 years, and major new investments in clean, renewable energy;
- A comprehensive housing foreclosure crisis bill, which will prevent hundreds of thousands of families from losing their homes (to be enacted soon);
- An innovation agenda that doubles basic research funding and creates a science, technology, engineering, and math teacher corps to spur innovation across our economy; and
- A return to fiscal responsibility in Washington, no longer passing the debt on to future generations of Americans, with pay-as-you-go budget discipline and a budget that balances in four years, unlike the President’s.