Minimum wage: up for some, down for others
June 06, 2007
Under the Iraq War funding bill signed by President Bush on May 25, 2007, the federal minimum wage will increase to $5.85 an hour on July 24, 2007. It is slated to eventually reach $6.55 an hour by July 2008 and $7.25 by July 2009.

What has caused a controversy at least in seven states is Section 402 of the bill which strikes down those state laws that require employers to pay a full minimum wage without relying on tips from customers to reach the minimum level. States, including Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington, have those laws and will see the minimum wage for tipped employees fall as much as $5.50 per hour. Another response is coming from owners of those companies who say that in order to keep their businesses afloat--especially those with stiff competition from foreign sources--they will have to consider massive layoffs.

The new Missouri minimum wage, enacted under Proposition B passed last November, will continue to supersede the federal minimum wage with a higher rate until the July 24, 2009 increase. In Missouri patrons, for example, in food establishments are expected to tip their servers in order to make up the difference between the lower wage paid by their employers and the hourly wage offered other presumably non-tipped workers. According to local workers we questioned, although the restaurant owners are supposed to make up the shortfall created by non-tippers, they often neglect to do that, causing a hardship.

To find out about applicable minimum wage laws by state, go here (

The Economic Policy Institute recently released analysis showing that the interaction between the federal minimum wage and state minimum wages varies. Currently, 33 states have passed minimum wage laws establishing higher wage floors than the federal $5.15 level. Several of these states are in the midst of phased-in minimum wage increases of their own, and some index their wages to inflation. The federal phased-in hike will in some cases surpass state minimum wages and in some cases not. By September 2009, the number of states with minimum wages above the federal level will be down to 12, with several states tied with the federal rate of $7.25.

Information for this article in part was contributed by Lara Granich, director, St.Louis Area Jobs with Justice

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