Federal minimum wage increases today

John Reid Blackwell
Media General News Service
Published: July 24, 2008

By JOHN REID BLACKWELL
TIMES-DISPATCH STAFF WRITER
Minimum-wage earners should see a bump in their hourly pay starting today.

The federal minimum wage is increasing by 70 cents, from $5.85 to $6.55 an hour. While the pay raise won’t directly affect the vast majority of working Virginians, it could cause ripple effects for consumers, businesses and workers.

The increase comes as workers and businesses are feeling the pinch of higher fuel costs and a slower economy.

Bruce Raynor, president of Unite Here, a union representing about 465,000 workers mostly in the hotel and food-service industries, said the increase would help stimulate the economy. “[Low-wage workers] are going to spend the money. They are going to buy food and clothes,” he said.

Some business groups fear the increases will put pressure on employers in an already shaky economy.

“It is not so much the wage [increase] itself that is a bad thing. It is the ripple effect,” said Rhoda Elliott, president of the area’s Bill’s Barbecue restaurants.

She worries the increase will put pressure on her and other employers to raise all wages at a time when businesses are dealing with other costs.

Today’s bump in the minimum wage is the second of a three-step increase. The minimum wage went from $5.15 to $5.85 an hour last July, the first increase in a decade. It will rise another 70 cents next year to $7.25.

About 46,000 Virginians were earning at or below the federal minimum wage in 2007, or about 2.6 percent of the state’s hourly paid workers, according to a federal government household survey. That was down from 51,000 in 2006.

Nationally, 1.7 million workers earned at or below the minimum wage in 2007, or about 2.3 percent of hourly workers.

Peter Edmonds, owner of Gelati Celesti shop in the Gold’s Gym Plaza in Henrico County, said he typically pays teenage workers $6.75 a hour. But he plans to raise that because of the change.

“When I first started out many years ago, someone told me if you pay minimum you are only going to get minimum work,” he said.

Although the Richmond area’s unemployment rate rose half a percentage point in May to 4 percent, the jobless rate has been low enough to keep wages generally well above the minimum.

Salaried and hourly pay across industries averaged about $21.88 an hour in the Richmond area.