Minimum Wage Milestone

By PlanetLaundry staff | Jan 06, 2012

On January 1, Washington became the first state to break the $9 an hour barrier for minimum wage, up to $9.04 an hour from $8.67.

This is because Washington pegs its minimum wage to the consumer price index, according to Paul Sonn of the National Employment Law Project. And that means whenever the cost of living increases, so does the minimum wage there.

Nine other states do the same. One of them, Missouri, opted for no change this year, and Nevada's increase won’t kick in until midyear, leaving eight states where the minimum wage rose as of January 1. However, Washington has been using that CPI-based formula since 2001, longer than any other state, and that's why its hourly wage is highest.

New minimum wage laws also took effect January 1 in Arizona ($7.65), Colorado ($7.36), Florida ($7.67), Montana ($7.35), Ohio ($7.70), Oregon ($8.80) and Vermont ($8.46), and will increase paychecks for more than 1 million workers, according to the Economic Policy Institute.

In addition to Vermont, Oregon and Washington, there are five states where the minimum wage exceeds $8 an hour – California ($8), Connecticut ($8.25), Illinois ($8.25), Massachusetts ($8) and Nebraska ($8.25). In the District of Columbia, the minimum wage is $8.25.

Opponents of a wage boost argue that minimum-wage hikes have unintended consequences.

“When you raise the price of something, including entry-level labor, you're going to decrease demand for it,” Michael Saltsman, research fellow at the Employment Policies Institute in Washington, D.C., told the Wall Street Journal.

In a struggling economy, profit margins are razor thin for several businesses, and many owners argue that they will be forced to cut employee hours or consider raising workers’ share of employee-provided health care.

Twenty-three states match the federal $7.25 an hour minimum, and nine states either have no minimum or have one below the federal level.