1. Archive

Higher wage might not help

Two months into her minimum wage job at Target Corp., Tara Dennis realized she and her three children would be better off if she was unemployed and on food stamps. So she quit.

"As a single mom, minimum wage isn't going to get me ahead. It's not even going to get me caught up," said Dennis, 23, who lives in Missoula, Mont.

A proposed increase that would bring the federal minimum wage to $7.25 would give workers like Dennis their first raise since the Federal minimum increased to $5.15 in 1997. But some low-income workers and their advocates say the wage increase won't affect many workers and is not a way out of poverty for minimum wage workers. Since the last increase, wages for most of the lowest-paid workers have risen above the federal minimum wage, while prices for necessities such as housing and transportation have grown faster.

"We should be aware that this is an extremely moderate proposal," said Jared Bernstein, senior economist of the Economic Policy Institute.

The minimum wage hike, which Democrats have put at the top of their agenda when the next Congress convenes in January, would affect 1.9-million hourly workers who make minimum wage and workers who get tips, who can make less than minimum wage. It would raise wages for an estimated 6.5-million workers or 4 percent of the work force - janitors, waiters, security guards, cashiers and store clerks - according to the Economic Policy Institute.

Adjusting for inflation, the minimum wage of $5.15 is at its lowest level since 1955. By 2009, a $7.25 minimum wage would have the spending power of $6.75 today, Bernstein calculated using Congressional Budget Office projections.

A wage increase to $7.25 would help, but "it wouldn't put anybody in the clear," said Cara Prince, 41, of Louisville, Ky. She has been working for a temporary agency for two years, doing factory, warehouse and restaurant work at $6 an hour.

"There's a whole lot I can't do," because of the low pay, she said. "By the time they take taxes out, there's nothing left. Just $23 a day."

But the proposed increase "is not a solution to poverty," said Matt Fellowes, a scholar at the Brookings Institute. "This is, for the most part, a symbolic effort."

Twenty-eight states and the District of Columbia will have 2007 minimum wages above the federal level. The highest in the nation is Washington state's $7.63 an hour, which is set to increase to $7.94 on Jan. 1.

Beginning Jan. 1, Florida's minimum wage will increase 27 cents, to $6.67 per hour, for all hours worked in Florida.

A minimum-wage worker in Washington state working full time would make $16,515 a year before taxes. The federal poverty threshold for a family of three is $16,600.